Gold Dips Ahead of Fed Policy

Gold has edged lower in relatively quiet trading ahead of the Fed policy statement at 2:00ET. The yellow metal remains in close proximity to the 5-month high established last week at 1307.59.Pervasive growth risks and deflationary pressures have resulted in further policy easings from a number of central banks in recent weeks. The Fed is widely expected to indicate that they will remain constant with respect to their first rate hike, but if the aforementioned risks persist, a rate hike this year may well be off the table already. FOMC is unlikely to admit to this, investors will be eying the language very closely for clues to that effect. American business, and therefore the Fed, are assuredly becoming increasingly troubled by the recent dollar strength. The Fed is likely to say something to temper the greenback's rally.On the other hand, the Fed may realize the the greatest economic threat right now is Europe. The EU may need a weak euro more than the Fed needs a weaker dollar, so they may have made a calculated decision to bide their time until the European situation stabilizes.

A rate hike this year would result in monetary policy that is too divergent. Doubleline's Jeffrey Gundlach said yesterday that a rate hike in June would be "disastrous". I think as hawkish as the Fed gets in 2015 is to hold steady on policy.The U.S. is the third largest gold producer, after China and Australia. There are lots of mines in Nevada produced more than 80% U.S. gold. Whereas other famous U.S. gold mines are located in Colorado and Alaska. Its official gold holdings are 8,133.5 tons which is the largest official gold holdings in global.American gold market was developed in the middle of 1970s, mainly the COMEX division of New York Mercantile Exchange, and later was incorporated into the CME. American gold market mainly trades gold futures, currently it becomes the world's largest trading volume and most active gold futures market, it also is the most efficient and complex futures trading organization. Its major trading objects are gold, silver, copper, and some financial derivatives. The transactions of gold futures and gold options are on the top of the world, are also recognized as the trading center of precious metals. At present, the varieties transactions contain gold futures, Mini options, options and funds.