If we see any drastic movement in gold from now until Dec 17-18, it is most likely because investors are getting signals of when tapering will occur.

If we see any drastic movement in gold from now until Dec 17-18, it is most likely because investors are getting signals of when tapering will occur. James Bullard, President of the Federal Reserve Bank of St. Louis, discussed that the Fed is likely to scale back its asset purchase program sometime soon given the positive economic data released last week. According to Bullard, a small possible tapering could be seen in the next meeting. Let’s face it, the Fed can’t inject money into the economy forever! By initiating a small taper, the Fed acknowledges an improvement in the labor market and still has a chance to monitor inflation. Bullard believes a small taper is a good idea because if inflation doesn’t meet target levels then the Fed can simply put tapering on pause. The Fed promises to keep interest rates near zero even when quantitative easing is over as long as the unemployment rate falls to 6.5% and inflation doesn’t climb above 2.5%. Richard Fisher, President of the Federal Reserve Bank of Dallas thinks that the Fed should begin tapering ASAP accompanied by a timeline of when markets can expect see an end to the asset-purchase program. Despite all the taper chatter, we see gold still manages to hold its gains from yesterday! This suggests that perhaps traders aren’t as nervous about what the Fed’s next move could be. PT seems to be following AU’s upward momentum and broke through $1400 this morning. Have a great day!