Gold Markets Brace For Results Of Federal Reserve Meeting

When the Federal Reserve meets, everyone pays attention to what they have to say.

The International Business Times is calling this week a “Big week for central banks” thanks to a big Federal Reserve meeting scheduled to proceed today and tomorrow. As the Federal Reserve is meeting with members of the Bank of Japan, the anticipation is that the Fed chairperson Janet Yellen is slated to keep interest rates where they currently are, just a tick above zero.

Gold investors, in particular, like to watch the developments of the Federal Reserve meetings because monetary policy is so strongly linked to gold prices. That’s no different this week, with investors keeping their eyes close on the news. With gold priced in dollars, any sort of policy set forth by the Federal Reserve is sure to have a big impact on where gold--and the dollar itself--ultimately ends up.

Predictions For The Federal Reserve’s Policy

Because so many people pay attention to Federal Reserve policy, making predictions about the Fed’s movements has become something of a pastime in financial circles. Joseph LaVorgna, chief economist at Deutsche Bank, believes that there won’t be much movement by the Fed after this meeting because of continuing economic murkiness. He does expect that the Federal Reserve’s cautious tone will be bolstered by the recent success of the stock market, however.

Reuters sees optimism as well, pointing out that the Federal Reserve’s policy might hold steady in the short term while still putting an interest hike on the horizon.

What does this mean for gold investors, if indeed the Federal Reserve does strike a cautiously optimistic tone and rates are not changed? It might end up simply indicating more of the same--a fairly healthy stock market in terms of prices for the short-term. But even as the stock market has gone up, precious metals have seen a solid year, with silver, in particular, showing signs of a bull market as of late.

Translating The Fed Meeting Into Gold Predictions

Although the Fed policy does have a direct impact on markets, the dollar, and necessarily gold, it’s not always easy to see a 1-to-1 translation from each big meeting to the price of gold.

For the time being, it appears as though the Federal Reserve might be slated to keep its current interest rates intact. Expect them to paint an optimistic picture of the future, potentially hinting at a rate hike in the next few quarters, but ultimately attempting to change very little.

If you’ve been bullish on gold already, there will likely not be any reason coming out of this meeting that you should abandon that mentality.

As is always the case, it’s impossible to make a prediction on future prices - that’s a big like trying to predict the weather two weeks from now. But if you pay attention to the trade winds, you should have an idea of whether or not your gold investment strategy is right for you. Unless the Fed does something unexpected, expect the economy to keep heading down its current course.