Gold little changed before Fed decision
ecPulse
2014-10-29 09:59AM UTC
Gold prices consolidated on Wednesday around $1230 per ounce, as investors awaited the interest rate decision from the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) today. Forecasts indicate that the committee will leave interest rates unchanged, as it will announce ending its stimulus program by withdrawing another batch of quantitative easing plans from markets, in light of further positive signals of improving the economic growth pace in the United States. FOMC is expected to keep the benchmark of interest rates at their current historic lows between 0.0 – 0.25%, with the withdrawal of the last batch of quantitative easing plans amounting to $15 billion. Gold spot rose 0.09% at 06:35 GMT. Investors’ focus is turned towards the timing of raising interest rates, as markets will try to ensure that Feds won’t raise interest rates until the second half of next year 2015 due to the recently released economic data, which indicated the probability of deflation in the euro zone. The Feds will most probably stay put in regards to the quantitative easing policy and the timing of raising interest rates; if the forecasts are correct, this will not change gold prices data, keeping the downside trend dominant. However, if the Feds decided to extend stimulus programs –which is ruled out by many analysts – or even delay the deadline to raise interest rates longer than the last forecast, this will strike financial markets as it will create doubts regarding the future of the U.S. economic recovery, which will be a big push for gold prices benefiting from the growing demand as a hedge against inflation.
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