Gold and silver suffered significant losses this week thanks to the Federal Reserve of the United States finally announcing that it will begin tapering Quantitative Easing. For those of you who do not know, Quantitative Easing, or QE, is the US government’s monthly purchase of bonds as part of an effort to stimulate economic growth.

Because tapering was finally made official, gold and silver markets have lost almost all of their appeal as investors are becoming more hungry for risks as opposed to the safe-haven qualities exhibited by precious metals. Thursday was the biggest day of losses this week as gold sunk to a 6-month low and fell underneath $1,200 for the first time in a long time. Gold and silver have since recovered, but only slightly as they have posted modest gains so far on Friday.

FOMC Announces Tapering

Receiving more attention than any other piece of news combined this week was the FOMC policy meeting that took place from Tuesday morning until Wednesday afternoon. The marketplace was abuzz with speculation with regard to whether the Fed will actually taper and, if they do, how severe will QE’s reduction be.

All the speculators across the market got their answer on Wednesday afternoon when Ben Bernanke announced that the FOMC decided to taper monthly bond purchases by about $10 billion, starting in January. The $10 billion reduction is actually two $5 billion reductions combined as the Fed will reduce treasury bond purchases by $5 billion and mortgage-backed securities purchases by the same margin. In the immediate aftermath of the Fed’s decision gold and silver did not fare terribly like so many had thought, but rather made some minor gains. When markets opened the day on Thursday, however, gold and silver were part of a different story. Almost immediately, both gold and silver suffered losses while US stocks and the USD were seeing extreme gains. The rest of Thursday panned out much like the morning did and by the time all was said and done gold lost over $40 while silver lost almost a whole dollar.

Things have since corrected themselves a bit on Friday, but gold and silver is about as unappealing to investors as it has ever been. Investors in both the US and around the world are seeing the Fed’s reduction to QE as well as a calmer, more secure US economy as a reason to take bigger risks with their investing funds. When investors are more keen on taking on risk, their interest in gold and silver drops off almost completely. While selling pressure is still very heavy, gold and silver may be able to make up some of their losses before the week is through.