Gold and silver have experienced their biggest losses in some time this week thanks, in part, to some comments made by Federal Reserve chairman Ben Bernanke. A highly anticipated Federal Open Market Committee meeting more or less took all the headlines this week as investors were keeping their eyes and ears peeled for information on the outcome of the meeting. This meeting was of particular importance due to the fact that it was held in order to decide what the future of monetary policy in the United States will be going forward.

FOMC Meeting

The Federal Open Market Committee, more commonly referred to as the FOMC, is the body that decides monetary policy in the United States. Their latest meeting started this past Tuesday and concluded on Wednesday afternoon. The purpose of the meeting was to make a decisive decision on what the future of monetary policy in the US will hold. Current monetary policy that is in place has worked to bring the US economy out of the recession that the world experienced in 2008. This policy is known as Quantitative Easing and is the Federal Reserve’s monthly buying of bonds in order to pump the economy full of cash. The more money that is floating around in the economy, the less valuable the US Dollar will be. A devalued US Dollar will make out exports look more attractive which will in turn improve our overall economic standing.

Investors and market watchers are split as to whether they think QE has worked up to this point, but it is an undeniable fact that the US economy has improved dramatically since 2008. Leading up to this meeting the most popular thought was that monetary policy would be left unchanged in the US, and that is exactly what happened. The FOMC announced that QE will be maintained and that no big changes will be made in the immediate future. This news delighted precious metals investors as their gold and silver refrained from taking huge dips.

Bernanke Press Conference

Since the FOMC meeting was the main story on most people’s minds this week and it produced no major changes, you are probably curious as to how gold and silver declined by so much. The reason behind this is because of the press conference Ben Bernanke held after the FOMC meeting.

In this he confirmed that no major monetary policy changes would be right now, but then alluded to the fact that bond buying may be wound down sometime soon. This simple allusion caused gold and silver to take huge nosedives and turn this week into one of major losses for precious metals investors. Even though Bernanke made no official decisions, his small remarks were enough to send the marketplace into a frenzy. Hopefully an increased demand due to lower prices will help improve the value of gold, though it is unlikely that $100 gains will be made anytime soon.

Weekly Move

Gold started the week at $1,390 and by the time trading concluded on Friday it had lost nearly $100 and was sitting at $1,295.

Silver started the week a little over $22 and by the end of the day on Friday was sitting at $20.09.