Gold Prices Today Moving Ahead of FOMC Meeting

Gold prices today (Thursday) were flat as anxious investors sit on the sidelines ahead of the conclusion to this afternoon's FOMC meeting.

gold brick bar financial chart calculatorIn early morning trading Thursday, spot gold prices were off a modest $1.20, or 0.11%, at $1,117.80 an ounce.

But gold prices soared $16.40, or 1.5%, to $1,119 per troy ounce on Wednesday. Wednesday's close marked gold's highest finish since Sept. 8. Stoking yesterday's gold rally were signs the Fed may not tighten its easy monetary measures until later this year.

A softer dollar and declining inflation also helped lift gold prices Wednesday. Both supported an increasing consensus among economists that the U.S. Federal Reserve will hold off raising interest rates for another month or more.

Labor Department data released Wednesday showed U.S. inflation fell 0.1% in August month over month. That was the first inflation drop since January. That trend sends mixed signals to the Fed, which has been looking at improving U.S. economy and jobs figures.

Fed officials have been concerned that consumer price increases have run below their target rate of 2% in recent months. Raising rates could elevate the risk of deflation.

With the Federal Reserve mulling an interest rate hike, here's what to expect from gold prices today...

Gold Prices Today Flat Ahead of Fed Meeting

Gold prices have been pressured for more than a year by prospects of the first interest rate hike in nearly a decade. Raising interest rates will add downward pressure to gold prices in the short term.

The U.S. central bank has kept interest rates near zero since 2008 in response to the financial crisis and recession. The Fed's rock-bottom interest rate policy was implemented to encourage lending, stimulate the economy, and boost the unemployment rate, which peaked at 10% in October 2009.

It also helped drive a seven-year bull market in stocks, and was a strong catalyst for gold prices.

Precious metal investors and traders remained guarded Thursday, waiting to hear from the Fed.

After months of speculation about one of the most highly anticipated central banks meetings in history, we learn at 2 p.m. today what U.S. policy makers have decided.

Just two months ago it seemed almost certain the U.S. central bank would raise rates in September. But following recent routs in financial markets, concerns of a serious slowdown in China's economy, and worries of a possible recession in the Eurozone, more investors and analysts are leaning toward a December rate liftoff.

Still, plenty industry experts expect a rate hike today. According to the latest CNBC Fed Survey, 49% of respondents believe the Fed will raise rates today.

It's also possible for the Fed to hike interest rates today and signal a "one and done" move, meaning they won't continue raising them. That would mean any decline in gold prices today could be muted.

In fact, gold prices could rally on one-and-done news as global economic and geopolitical woes continue to make a solid case for holding the precious metal.

Whatever the Fed does, look for volatile reactions from all markets in the immediate aftermath of the FOMC statement.

Stay informed on what's going on in the markets by following us on Twitter @moneymorning.

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