Gold & Oil Down After Fed Meeting

Commodities, including crude oil and gold dropped today, after the US Federal Reserve hinted yesterday that quantitative easing may be reduced in the future. The Fed improved its projections for the next year’s economic indicators and said:

The committee sees downside the risks to the outlook for the economy and the labor market as having diminished since the fall.

Chairman Ben Bernanke said in a press conference after the announcement:

If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year.

Such comments suggest that policy makers are really planning to remove some part of stimulus that was implemented earlier.

Crude oil also fell as US inventories expanded. The stockpiles expanded by 0.3 million barrels to 394.1 million barrels last week from the week before.

Futures for delivery of WTI crude oil in July fell $0.78 (0.79 percent) to $97.46 per barrel as of 1:12 GMT on NYMEX today. August Brent crude dropped $0.91 (0.86 percent) to $105.21 per barrel on ICE. Contract for gold tumbled as much as $35 (2.55 percent) to $1.339 per troy ounce on COMEX.

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