Yesterday’s marquee event was Janet Yellen’s press conference after the FOMC decision to hold rates and policy. In their economic statement, the Fed reduced their outlook for growth in 2014 due to the harsh winter in the first quarter but the Fed said that the economy was bustling with the jobs market performing well and housing starting to recover. The Federal Open Market Committee cut asset purchases at the end of a two-day meeting for the fifth straight time. Fed participants estimated long-term growth for the U.S. economy of 2.1 percent to 2.3 percent, compared with 2.2 percent to 2.3 percent in March and 2.5 percent to 2.8 percent in January 2010 in the wake of the most recent recession.
As the news was release precious metals recovered slightly with gold adding 0.4% to trade at 1277.80 and continued to trade in the green adding $5.00 to trade at 1277.70 in the Asian session. Silver took its cues from gold to trade at 19.956. Platinum added 0.3 percent to 1,455.25 while palladium advanced 0.3 percent to 828.38 an ounce.
Traders were hoping for a more definitive timeline for interest rate increases from Janet Yellen, but all they got was assurances that there would not be a rate increase in the remainder of 2014 and instead of offering promises for 2015 she gave the poll results from the Fed members showing that almost all voted in favor of no increase in 2014 leaving possibilities for 2015 open. Gold prices rose after the Federal Reserve said interest rates will remain low, boosting demand for the precious metal as an alternative asset,
Copper eased by 19 points this morning to trade at 3.046 after gaining most of the week after the Chinese central bank cut rates and the Chinese Premier promised to take aggressive action to keep the economy growing. China’s economy would not suffer a hard landing and would continue to grow at a medium to high pace in the long term without strong stimulus, Chinese premier Li Keqiang, who is in London right now, said on Wednesday. Questions over China’s economic growth have given investors pause for thought for some time. On the plus side, panic that a hard landing for the world’s second largest economy was on the cards have so far been allayed, with the bubble-like increases in housing and real estate appearing to slow. When it comes to growth, policy makers have switched to a focus on quality, not quantity, with targeted easing in a variety of sectors. At the end of the day, many other economies would love to achieve China’s projected annual gross domestic product growth of above 7%. But China is not out of the woods yet, and might have just gone further in. Companies have started to take a step back from plowing capital into China, as they assess the credit overhang and the potential for sectors that have shown exponential growth to tip over the edge. The London Metal Exchange copper prices fell in early Asian trading on Thursday June 19, amid escalating concerns over violence in Iraq.