Today is an important day for many as the fed will be discussing the cutting back of its stimulus scheme; interestingly the outcome of this meeting may well determine the future of many.
In this FOMC meeting the fed is likely to announce when it shall begin tapering back its asset purchasing and gold has reacted as expected by falling to below $1,300.
Currently the fed has been buying $85 billion in bonds each month using newly printed money, until now where it is thought this figure will be cut to around $75 billion.
The highly anticipated press conference will begin at 2.30pm in the US with many UK investors tuning in this evening.
From what can be gathered so far the reining back of data purchases is highly dependent on US economic data. Over the recent weeks we have seen a mixture of data reports, and on the whole job growth does remain to be weak and inflation is fairly low. Therefore we could expect a reserved beginning to the tapering. The cautious approach allows the fed to rein back asset purchasing but at a rate dependent on how the US economy is unfolding, allowing the policy makers to assess the effects on the market before acting.
This is a highly data dependent approach may not necessarily sit well with other fed officials who have expressed apprehension at the scale backs. The main issue being many believe that a tapering back in the looser monetary policy will lead to a tightening effect in other areas leading to rising interest rates. Therefore the central bank will also have the job of explaining that a scale back in asset purchasing is not directly correlated with rising interest rates.