Traders backed away from precious metals as well as base metals on Wednesday, as the day of reckoning – the Federal Open Market Committee meeting – draws ever closer.
"The longer-term question will be on how much of the Fed’s action has already been priced in," Tom Pawlicki, an analyst at Chicago's MF Global Holdings, told Bloomberg News.
That's always the key question – while quantitative easing will, in many investors' minds, dilute the value of the dollar, so much trading has turned on the possibility of a massive monetary stimulus that it's entirely possible the Fed's announcement will fall short.
That creates the distinct possibility of a "sell the news" event, in which investors will inevitably be disappointed by the scale of the Fed's quantitative easing, giving the markets a distinctly overbought character.
Comex gold futures for December delivery dropped $16.60 to $1,322 per troy ounce, while silver futures for delivery in two months slid 40 cents to $23.40 per troy ounce.
Palladium, which has attracted relatively strong demand from investors recently, lost $1.95 to $623.50 per troy ounce.
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