Gold markets eye Fed’s March policy decision

Gold edged up of $1,130 per troy ounce in late trading yesterday, but dropped $10 again this morning. The Fed did not give a clear picture to the market on how it plans to proceed with its rate hike cycle. The implementation of another rate hike in its next meeting in March is highly dependent on the U.S economy's recovery from its current weakness and stabilizing financial markets.

International Monetary Fund recently stated that the following central banks purchased further gold in December:

• China purchased 19 tons
  
  
• Russia bought 22 tons
  
  
• Turkey reserves increased by 5.8 tons
  
  
• Kazakhstan purchased 3.1 tons
  
  
• The United Arab Emirates acquired 2.5 tons (in November)

If the Fed doesn't hike rates in March, gold prices are likely to benefit as it would lower the  opportunity costs of holding gold.