Gold Prices Should Appreciate As The Fed's Hands Are Tied
London (Oct 28) Gold prices should appreciate after the Fed meeting this week. Gold prices have been burdened by the strengthening dollar for the past couple of years. The dollar strengthened again last week thanks to extraordinary language from the European Central Bank (ECB), but gold hardly budged while oil prices plunged. Gold's strength appeared to be due to expectations about the Fed policy decision this week, or rather its likely indecision. The Fed will probably not raise interest rates this week, given recently soft U.S. economic indications and the strong position of the ECB in the opposite direction (expansionary policy). If I am correct about the Fed, gold prices should be cleared to appreciate further near term. As time progresses and the economic recovery solidifies in Europe and China growth stabilizes, dollar strength should fade. As a result, gold gains a solid footing for the long term as well.