FOMC Meeting & Cyprus’ Financial Future

Gold and silver are quietly grinding higher today as they try to break away from their recent consolidation. Yesterday saw some typical knee jerk reactions from the precious metals in the immediate wake of the FOMC rate decision and commentary. The Fed expressed optimism about the improvements in the labor and housing markets but it remains cautious in its assessment of the outlook going forward. In the overnight session, China flash manufacturing PMI came in higher than expected at 51.7 versus the consensus of 50.8. This helped gold and silver catch initial bids in the Asian time zones. In Europe, the ECB has set a Monday deadline for Cyprus. If the Cypriot government doesn’t seal a deal with the European Union and the International Monetary Fund by Monday, the ECB will cut off emergency funding for its beleaguered banks. European and US bourses have taken a hit today on fears of the Cypriot situation. With equities finally faltering, gold and silver all of the sudden look a bit more appealing. Gold’s traditional safe haven allure is also allowing it to press higher. Sizable offers for the yellow metal should materialize at $1,630 where the 50 day moving average and a Fibonacci level wait. Silver should be able to move up towards $29.50 before encountering resistance.