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Ben Bernanke Tapers QE

On Wednesday evening (London) the FOMC completed their two day meeting and announced the Fed would start tapering the amount of assets purchased each month. Analysts and market commentators were mixed as to their views, with the minority expecting Bernanke to act in December with the majority believing the Fed would wait until January or even March.

The release came at 7pm London that the Federal Reserve is reducing the current level of asset purchases to $75bn from the previous monthly amount of $85bn, a reduction of $10bn. This is a positive sign for US economy, as the committee feel the economy is strong enough to begin weaning off the stimulus.

Bernanke accompanied the reduction of stimulus with comments reiterating that interest rate increases are likely to stay low;

Well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below

Following the release initially indices fell, though this move quickly reversed with the Dow rallied 292.71 points to close at 16,167.92, a record high

Gold trades below $1200

The precious metal has traded below the psychological level of $1200 for the first time since June 28th, following the cut in economic stimulus. As the recovery has gained momentum the Gold price has tumbled from the record highs of September 2011. 

Spot Gold  Source: Abshire-Smith

We also recommend reading an article by Ambrose Evans-Pritchard at The Telegraph: "Farewell QE, you have been a magnificent success"

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