"The market understood, but the market overreacted," Blankfein told CNBC's Maria Bartiromo on "Closing Bell," adding Fed Chief Ben Bernanke made clear in his comments last week that the program could start winding down toward the end of 2013, but only if labor-market conditions greatly improve. "The market, of course, took this as 'Oh, my God. It's the first moment and it was going to be an avalanche.' And of course, that doesn't necessarily have to be the case."
Critics have argued the Fed's policies will further devalue the U.S. dollar and ultimately create inflation, which is why many investors have bought gold as a hedge against this possibility. Gold had skyrocketed as the Fed rolled out quantitative easing, but on the belief it will soon curb its bond buying, investors have relentlessly sold the precious metal for nine straight sessions.