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Gold Futures Off Lows As Some Fed Members Show Concern For Weak Inflation

Kitco News

(Kitco News) - Gold prices are off their lows, but still down on the day following growing concerns from some of the members of the Federal Reserve on inflation.

The minutes of the September Federal Open Market Committee (FOMC) meeting show that inflation was a major topic among the committee members.

The minutes said that “many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent.”

The weak inflation pressures are also causing some members of the Federal Reserve to question further interest rate hikes.

“A few of these participants thought that no further increases in the federal funds rate were called for in the near term or that the upward trajectory of the federal funds rate might appropriately be quite shallow,” the minutes said.

December gold futures last traded at $1,290.60 an ounce, down 0.25% on the day.

While some dovish Fed members were vocal, other participants raised concerns that if they wait too long to raise interest rates the economy and inflation would quickly overheat.

“These participants cautioned that an unduly slow pace in removing policy accommodation could result in an overshoot of the Committee's inflation objective in the medium term that would likely be costly to reverse or could lead to an intensification of financial stability risks or to other imbalances that might prove difficult to unwind,” the minutes said.

Helping to boost gold prices is the fact that interest rate expectations are starting to fall in reaction to the growing divide among U.S. central bankers. CME 30-Day Fed Fund futures see a 87% chance of a December rate hike, down from 92% chance see earlier in the day.  

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