Fed Leaves Rates Unchanged; Gold Price Sinks

The US Federal Reserve’s most recent two-day policy meeting ended Wednesday, and as expected, the central bank elected not to raise interest rates. 
According to a Reuters article released prior to the decision, market participants saw “virtually no chance” that the Fed would hike rates. It hasn’t raised rates in around a decade, and though it has said it plans to do so by the end of 2015, expectations are now running high that it won’t happen until next year.
Some even believe the Fed won’t raise rates until well into 2016. As Gold Newsletter Publisher and Editor Brien Lundin said recently, “the Fed really cannot raise rates in this current environment because there are some indications of a potential recession looming.”
And indeed, it does seem to be concerns about a recession that are holding the Fed back. As Reuters explains, “[a] spate of dismal data on the U.S. and global economies has fueled a public row between Fed Chair Janet Yellen and fellow policymakers.”
All in all, three Fed policymakers currently want to wait until next year to raise rates. They’ve argued that “slower growth abroad could sap U.S. economic strength and keep inflation too low.” That dissent is harmful for the economy — if investors are surprised by the Fed’s actions, volatile markets are the likely result.
Wednesday’s decision has already resulted in some volatility. Gold, which was trading at about $1,176 per ounce before the Fed’s news hit at 2:00 p.m. EST, had fallen to $1,167.65 as of 2:02 p.m. EST.
The Fed’s press release offers little indication of when it may ultimately hike rates. Its next meeting will not be held until December 15 to 16.