The U.S. Federal Reserve bottled it on tapering its quantitative easing program, which was positive news for risk currencies and risk assets and the relief will no doubt support rallies, but the Fed has merely kicked the can down the road.
It was not too surprising that there is going to be no tapering for some very good reasons. It is hardly surprising that the recovery in gold and silver prices last night was dramatic, with gold moving up $70 and silver by $2 from intra-day lows.
Gold markets are having difficulty making up their minds on how the weakness of currencies like the rupee will affect demand for physical metal. Does it mean that gold being more expensive in local currency will see a drop off in demand?