Gold prices dropped slightly today (going as low as $1,317 an ounce) as investors wait for Wednesday’s Federal Reserve Policy meeting and the U.S. jobs report that comes out Friday. Aurum Options Strategies principal gold trader, Paul Sacks, said of the stock exchange: “It’s quiet in the pits as traders appear to be waiting on the announcements.”

Most experts and analysts do not expect to be surprised by Wednesday’s Fed policy statement. The current policy of buying $85 billion in bonds per month is expected to get the backing of the central bank. Traders will be looking to read between the lines of the announcement, however, looking for any clues about when the Fed may begin to reverse course on its economic stimulus plan.

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Any mention of a reduction in asset-backed purchases by the Fed would be viewed as a negative for gold prices by investors. Since gold is used as a hedge against inflation, it is most valuable when the Fed is pumping money into the system in turn devaluing the U.S. dollar. If the Fed stops buying bonds, then money would be taken out of circulation which could strengthen the dollar and lead to lower gold prices.

Friday morning’s U.S. jobs report may be even more anticipated than the Fed meeting. The Federal Reserve has said previously that if the national unemployment rate reaches or goes below 6.5% then they would begin the tapering of the economic stimulus. So a positive jobs report could lead to an immediate drop in gold prices. On the other hand, a negative jobs report could lead to a surge in gold prices.

Experts still agree that gold is an important piece of every investment portfolio. These announcements simply create the question of when is a good time to buy gold. The Fed Reserve announcing that they will stay course, in combination with a negative jobs report, could signal that the time to buy gold is now. Analysts expect this outcome to lead to an increase in the price of gold. In contrast, a positive jobs report may lead to a short term drop in gold prices. This could spark a great buy-low opportunity for investors who have patiently been waiting for the gold market to bottom out.