Gold prices remain under pressure but are largely ignoring the minutes from the Federal Reserve’s July monetary policy meeting, even as the central banks continue to focus on the ongoing inflation threat.
The minutes showed that the committee continues to see inflation as a significant risk to the economy.
“Participants observed that inflation remained unacceptably high and was well above the Committee’s longer-run goal of 2 percent,” the minutes said. “Participants also noted that the high cost of living was an especially great burden on low- and middle-income households. Participants agreed that there was little evidence to date that inflation pressures were subsiding.”
The gold market appears to be taking the latest minutes in stride, holding steady losses. December gold futures last traded at $1,779.20 an ounce, down 0.52% on the day.
According to some market analysts, comments from the Federal Reserve that interest rates could remain at higher levels for longer could be a negative for the gold market. Many analysts have noted that gold has managed to hold up well as investors are expecting the U.S. central bank to reserve course on interest rates by mid-2023.
The market expects the Federal Reserve to continue to raise interest rates aggressively next month. Markets are roughly split 50/50 on whether it will be a 50-basis point move or a 75-basis point move.
“With inflation remaining well above the Committee’s objective, participants judged that moving to a restrictive stance of policy was required to meet the Committee’s legislative mandate to promote maximum employment and price stability,” the minutes said. “Some participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2 percent.”
Jim Wyckoff, senior technical analyst at Kitco.com, said the minutes did not hold many surprises for the gold market, which is why prices didn’t react to the news.
“The marketplace was looking for clues on the timing and degrees of upcoming monetary policy tightening from the U.S. central bank,” he said.
Source: Kitco news written by: Neils Christensen