Gold price flat ahead of Fed announcement

The price of gold is broadly unchanged with traders in wait-and-see mode ahead of tomorrow’s US Federal Reserve meeting.

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.

Spot Gold (DFB) chart

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