The gold market captured a lot of headlines last week, with market-moving news apparently having big implications for gold investors. Yet whether you invest in precious metals or stick with other investments like stocks and bonds, the biggest lesson from the gold market this week was that overreacting to short-term news can lead you on a wild roller-coaster ride that eventually leaves you pretty much exactly where you started.

The Fed: much ado about nothing?
Coming into the week, gold investors had their sights squarely focused on the Federal Reserve's monetary policy meeting Tuesday and Wednesday. Most investors expected the Fed to start to reduce its bond-buying program, and gold investors were nervous that an end to quantitative easing could further hurt the yellow metal's prospects.

Yet on Wednesday afternoon, the Fed announced that it wouldn't pull back on QE yet. As this chart from Fool contributor Rich Duprey shows, gold prices spiked higher by about $35 per ounce in a matter of minutes, sending the bullion-tracking SPDR Gold (NYSEMKT:GLD) to 4% gains on the day.


Source: Kitco.com, courtesy Fool contributor Rich Duprey.

Silver climbed even more dramatically, with rises of more than 6% for silver-tracker iShares Silver (NYSEMKT:SLV). Putting in even better performance, mining stocks shot upward as well. Goldcorp (NYSE:GG), which is one of the leaders in terms of low-cost production of gold, posted an 8% gain on Wednesday. Barrick Gold (NYSE:ABX) climbed nearly 10% as shares applauded the potentially even greater impact of rising bullion prices on its cost structure, and some much-smaller mining companies posted even bigger gains.

How gold got tarnished
The enthusiasm over the Fed's inaction lasted only a day, however. After the announcement, gold started giving back ground as investors realized that even if the Fed hadn't acted this month, it would eventually do so. Investors therefore focused on exactly the same long-term concerns they had had before the Fed announcement. For the week, SPDR Gold and the Market Vectors Gold Miners (NYSEMKT:GDX) ETF of major gold-mining stocks finished with little change, while silver and smaller miners actually declined for the week.

Total Return Price data by YCharts.

The lesson gold taught attentive investors this week was that the spectacle of the Fed decision turned out to be just a brief distraction from the long-term factors influencing the precious-metals markets.

The same lesson often applies to other markets, including stocks. News can take stocks on a wild ride in the short run, but over longer periods of time, fundamentals reassert themselves in the stock's long-term performance. Paying attention only to what truly matters can save you focusing too much on gut-wrenching short-term moves that can lead you to make investment mistakes.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.