Gold and silver exchange traded funds surged in a knee-jerk reaction after the Fed caught traders off guard, but lingering uncertainty over tapering and some profit taking weighed on precious metals.
The iShares Silver Trust (NYSEArca: SLV) dropped 5.5% Friday while the SPDR Gold Shares (NYSEArca: GLD) fell 2.5%. Over the past week, SLV is down 2.0% and GLD is up 0.5%. [Crunch Time for Gold ETFs Again]
Silver futures were trading around $21.8 per ounce and gold futures were hovering around $1,332.5 per ounce.
James Turk, founder and chairman of GoldMoney, pointed to the Friday sell-off as the “logical reaction to the big jump in gold” after the Fed unexpectedly kept its accommodative measures unchanged, MarketWatch reports.
On Thursday, gold jumped 4.7% and silver surged 8%, its largest rally in almost five years.
Additionally, Turk believes investors also ditched metals on uncertainty due to “more jawboning by the Fed that maybe tapering will be announced after the FOMC meeting next month.”
Federal Reserve Bank of St. Louis President James Bullard hinted at a “small taper” in fiscal stimulus in October, reports Debarati Roy for Bloomberg.
“The next cycle of Fed watching has officially begun,” Steve Scacalossi, vice president at TD Securities Inc., said.