Update: Gold prices today (Wednesday) took a dive following the U.S. Federal Reserve's afternoon policy statement and press conference.
This morning, spot gold was on track for a third-straight session of gains, at $1,235.80 an ounce as of 12:30 p.m. EDT. But by 3:30 p.m. (after the Fed's announcements), the yellow metal had dropped $6.80 to $1,229 an ounce. Source: Kitco
On Monday, gold prices hit an eight-month low at $1,225.30 an ounce. U.S. gold futures were flat at $1,236.20.
Here's how the Fed is affecting gold prices today:
Bad for Gold: The U.S. dollar moved toward a 14-month high today. Last week, the dollar rallied to a six-year high against the yen and a 13-month high against the euro, causing the yellow metal to lose nearly 3% of its value.
Good for Gold: The Fed re-stated its previous initiative that it'd keep interest rates low for a "considerable time." Interest rates are important for gold investors because low interest rates make gold a more attractive investment. When rates go up, investors typically seek out higher-yielding assets. That the Fed will maintain its near-zero interest rate policy for a while longer supports higher gold prices.
Bad for Gold, Part 2: Even though the Fed said it will hold interest rates lower for the time being, there's an overall sense that we're moving closer to a policy shift. The Fed saw enough "strength in the broader economy" to cut its quantitative easing program by another $10 billion.
Quote of the Hour: "The dollar spiked a bit," FuturePath Trading broker and futures analyst Frank Lesh said to Kitco. "Overall, that remains a problem for gold. We're a little closer to rates going higher - not that we know exactly when."