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Gold Prices Holding Steady Following Minutes Of July Federal Reserve Meeting

Kitco News

(Kitco News) - Gold is seeing little reaction as it holds critical support above $1,500 an ounce after the July Federal Reserve monetary policy meeting minutes showed the committee was reluctant to embark on new easing cycle.

Gold prices have been under modest pressure for most of the day, with selling picking up in reaction to the minutes of the July monetary policy meeting, which saw the U.S. central bank cut interest rates for the first time in more than a decade.

December gold futures last traded at $1,513.20 an ounce, down 0.12% on the day

“Most participants viewed a proposed quarter-point policy easing at this meeting as part of a recalibration of the stance of policy, or mid-cycle adjustment, in response to the evolution of the economic outlook over recent months,” the minutes said.

The minutes also showed that committee members downplayed economic risks to the U.S. economy.

“Several participants favored maintaining the same target range at this meeting, judging that the real economy continued to be in a good place,” the minutes said. “These participants acknowledged that there were lingering risks and uncertainties about the global economy in general, and about international trade in particular, but they viewed those risks as having diminished over the intermeeting period.”

However, many economists are looking past the latest monetary policy minutes as financial conditions have dramatically changed. Since July monetary policy meeting, global recession fears have grown significantly.

Last week gold prices hit a six-year high after the 2-year/10-year yield curve inverted for the first time since 2008 financial crisis.

Many economists are looking past the latest central bank minutes and are eagerly waiting to hear from Federal Reserve Chair Jerome Powell when he speaks Friday during the annual Jackson Hole Central Bank Symposium. Many economists and market participants are expecting him to signal another rate cut in September.

Royce Mendes, senior economist at CIBC, said that it feels like a life-time has passed since the July monetary policy meeting.

“A lot has happened in global markets and economics since then,” he said. “Trade tensions have since heated up, and may be enough to turn some of those officials. Given the deterioration in sentiment, it does look like the Fed is still on course to cut rates next month again. So long as the trade-war risks remain contained, that could be it from the Fed, but downside risks have been growing in recent weeks and could change that course.”

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