Gold is trading up slightly at $1313, though the metal has lost some ground over the past few hours. All the focus is on the Federal Reserve’s two-day meeting which ends with an announcement tomorrow. Many investors view gold as a safe-haven investment, so any surprises tomorrow could lead to an increase in volatility.
The Fed has been supporting the US economy by purchasing bonds worth €85 billion each month, and most analysts believe the Fed will trim its stimulus package between now and the end of the year. Some economists are forecasting a reduction in the bond-buying scheme of $10 billion tomorrow, but if the stimulus package is trimmed by than more than $10 billion traders may buy gold as it is deemed a low-risk investment.
Alternatively, if the Fed leaves its monetary policy unchanged, it may encourage traders to take money out of safer assets like gold and buy equities instead.