February Comex gold increased $8.30 (0.5%) Wednesday and settled at $1,717.90 an ounce.
And then the sell-off started.
Gold fell 1.2% in the next session to $1,696.80, for a $21.10 drop. The fall was mostly due to profit taking.
But analysts see Fed action as bullish for the precious metal. Investors are expected to come back and buy gold since it's a hedge for inflation and uncertainty.
Also bringing in the gold players is the unemployment figure. The Fed addressed it on Wednesday and said that while the current number is 7.7% their desired one is 6.5%. They plan to keep interest rates very low until this is achieved.
Bill O'Neill, partner at the commodities investment firm LOGIC Advisors said to Reuters of the unemployment number, "That's a bullish for gold for the Fed to say it will keep interest rates low until unemployment rate drops to 6.5 percent-it doesn't look that's going to happen anytime soon."
So what's next for gold as we head into holiday season?
Gold Prices on Steady Rise
Jeffrey Wright, managing director at Global Hunter Securities, said earlier this week that he didn't see a quick rise in gold prices but a steady one.
He told MarketWatch there is "higher gold above $1,850" to come in 2013's first half.
Last week, a Pavilion Global Markets report also gave the vote for high gold prices.
Pavilion analysts told CNN, "We believe that gold is increasingly used as an instrument to play monetary policy and interest rates. As rates fall, gold becomes 'less expensive,' and thus, more attractive."
Also affecting monetary policy is the recent stance by theEuropean Central Bank. The ECB will likely cut interest rates in 2013 as the region's economy continues to contract.
James Cordier, president of Liberty Trading GrouCordier said toCNN, "When you're forgiving debt and printing money, that's wildly bullish for gold. For gold to hit new record highs in 2013 seems very possible."
On Dec. 6, Morgan Stanley (NYSE: MS) analyst Hussein Alidina went so far as to write in a research note that gold is 2013's best commodity.
"We maintain our long-standing recommendation of overweight exposure to precious metals as conditions underpinning the gold bull-run largely remain in place,"Alidina wrote in a note.
For investors interested in what could be the "best commodity of 2013," here are the best ways to buy gold.
He also cited four additional reasons for higher gold prices which included a weaker U.S. dollar, central bank buying, ETF demand and a recovery in Indian demand for gold.
Allidina has an average gold price of $1,853 per ounce in 2013.
And then we have the looming fiscal cliff that will affect gold prices in the near term.
This will take over the headlines for the rest of the year and gold traders are likely to vacillate in their trading-even going lower-but gold prices are likely to stay within the current range as we move toward the New Year.
Gold prices were up to about $1,697.70 on the Comex in early trading Friday.