Gold Still on Hold

Gold prices did not show a huge reaction to the FOMC meeting announcement today in which the Fed appeared to sound more dovish-and perhaps a bit confusing as well. The metal is now hovering around the $1200 area, and it is likely that no significant changes in price action are seen until the new year.

The central bank left in its language the phrase "considerable time" when referencing interest rate policy and the notion of beginning the tightening cycle. Other parts of the central bank's statement were considered to be more hawkish, however, and some investors feel that the Fed gave some mixed signals with regards to its intentions. Perhaps the Fed is simply trying to buy some time until it feels it has a better handle on economic activity amid a stronger dollar and sliding crude oil prices.

Stocks rallied sharply off the statement which could potentially deflate some bullishness in gold and precious metals. That being said, the gold market may potentially benefit from some safe haven demand as ongoing concerns over crude oil prices and the slide of the Russian ruble are cause for concern. While the Russian central bank raised its interest rate from 10.5 to 17 percent this week in order to try and protect its currency, it remains to be seen if this move will be effective. The notion of currency contagion will likely drive some demand for precious metals until some degree of stabilization is seen.

Gold has shown some signs of life recently but has yet to make a decisive move higher. Last week's highs remain near term resistance for the gold bulls while the recent lows in the $1140ish area remain key support. Increasing volume around the lows could potentially be indicative of a near term bottom in the yellow metal.