(Kitco News) - The gold market is holding support just above $1,800 an ounce and is seeing little reaction to the Federal Reserve minutes that highlighted discussion that some committee members see the potential for the central bank to tighten its monetary policy sooner than expected.
The minutes of the Federal Reserve’s June monetary policy meeting reflected some optimistic tones from the committee as the U.S. economy continues to recovery from the COVID-19 pandemic.
“Participants observed that economic activity was expanding at a historically rapid pace, led by robust gains in consumer spending. A vast majority of participants revised up their projections for real GDP growth this year compared with the projections they had submitted in March, citing stronger consumer demand and improvements in vaccination rates as the primary reasons for these upgrades,” the minutes said.
The minutes also noted that because of the pace of the recovery, some committee members expected the Federal Reserve would start tightening its monetary policy, reducing their bond-purchase program sooner than expected.
“Various participants mentioned that they expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had anticipated at previous meetings in light of incoming data,” the minutes said.
The gold market appears to be taking the latest minutes in stride, with prices seeing little movement in initial reaction to the data. August gold futures last traded at $1,806.50 an ounce, up 0.70% on the day.
Although there is some support among central bankers to tighten interest rates, the minutes did not provide any strong decisive sentiment as many committee members also noted that risks to the economy remain.
“Some participants saw the incoming data as providing a less clear signal about the underlying economic momentum and judged that the Committee would have information in coming months to make a better assessment of the path of the labor market and inflation. As a result, several of these participants emphasized that the Committee should be patient in assessing progress toward its goals and in announcing changes to its plans for asset purchases,” the minutes said.
The minutes noted that two risks to the U.S. economy are supply chain issues and the growing labor shortage.
Looking at inflation pressures, the Federal Reserve continues to see rising price pressures as “transitory.” However, sentiment is starting to shift.
“Looking ahead, participants generally expected inflation to ease as the effect of these transitory factors dissipated, but several participants remarked that they anticipated that supply chain limitations and input shortages would put upward pressure on prices into next year,” the minutes said.
“Several participants expressed concern that longer-term inflation expectations might rise to inappropriate levels if elevated inflation readings persisted,” the minutes added.
Katherine Judge, senior economist at CIBC said that the minutes show how divisive the U.S. central bank is when it comes to monetary policy. However, she added that she expects a consensus to grow as the economic recovery progresses.
“The minutes of the June FOMC meeting showed that policymakers viewed the US economy as moving in the right direction, while still being underwhelmed by progress in the labor market,” she said. “We think a continued acceleration in job gains ahead will represent enough of a trend for an announcement of an early 2022 tapering at the September meeting.”
Article From & Read More ( Gold prices holding above $1800 following Fed Minutes - Kitco NEWS )https://ift.tt/3dR0CVi
Business
Bagikan Berita Ini
0 Response to "Gold prices holding above $1800 following Fed Minutes - Kitco NEWS"
Post a Comment