The Fed may just have delivered an early Christmas present to the financial markets. After the Fed announced it would not taper its asset purchases, as many investors had expected, financial markets rallied, from stocks to bonds and even gold. While the S&P 500 surged 1.2% to a record high yesterday, gold prices have soared 5% and are at $1,367 an ounce in early morning trading Thursday.
In a statement following its meeting the Fed said it “decided to await more evidence that [economic] progress will be sustained before adjusting the pace of purchases.” Fed Chairman Ben Bernankeexplained in a press conference, “Conditions in the job market today still are far from what all of us would like to see,” and “the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and the labor market.”
In response to Bernanke’s comments, gold – which had been retreating in part because of expectations of tapering
