Watch The Federal Reserve For Clues As To Where Gold Is Headed

Watch The Federal Reserve For Clues As To Where Gold Is Headed

If you’re into trading gold binary options, now is the time to start paying close attention to the commodity. That’s because, on Wednesday, the Federal Reserve will meet, and the decisions made in this meeting have large implications for the precious metal. Today, we’ll talk about the Federal Reserve’s meeting, why what happens at this meeting will likely lead to movement in the value of gold, and what binary options traders should be watching for ahead.

The Federal Reserve Is Meeting As We Speak

As mentioned above, gold is going to be the commodity to watch ahead, largely because of the United States Federal Reserve meeting. This meeting is actually taking place as we speak. On Tuesday, Federal Reserve leaders met to discuss the state of the United States economy, what to do with regard to interest rates, and most important for many, the Fed’s balance sheet.

The balance sheet at the Federal Reserve sits at $4.5 trillion thanks to bond purchasing in its quantitative easing program. While that policy helped to bring the United States economy back to growth, it definitely didn’t come without a cost. Now that the financial crisis is clearly over, the Fed needs to make this up by returning to a standard monetary policy with higher interest rate and no fueling of the market by the Fed.

As a result, when the meeting ends on Wednesday, the Federal Reserve is expected to explain how it plans on reducing the massive amount of Treasury and mortgage securities that it holds. In a statement, Jim Caron, fixed income portfolio manager at Morgan Stanley Investment Management, had the following to offer

“That’s what everyone is going to be looking for. I don’t think it’s any surprise that they’re going to be moving by 25 basis points. It’s going to be a question of how they incorporate that with the balance sheet. If they don’t say much about it, that’s going to be viewed as very dovish by the market…”

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