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Gold prices push above $1,750 as Fed looks to slow the pace of rate hikes - FOMC minutes

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(Kitco News) - The gold market is trading just off session highs above $1,750 an ounce as the Federal Reserve signals a slower pace of rate hikes through year-end, according to the minutes of the November monetary policy meeting.

Although persistently high inflation remains a significant threat, the central bank committee said that it would be appropriate to slow the pace of rate hikes.

“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate. A slower pace in these circumstances would better allow the Committee to assess progress toward its goals of maximum employment and price stability,” the minutes said.

However, the discussion is a lot more nuanced, as the minutes show that some committee members wanted to keep the current pace in place.

“A few other participants noted that, before slowing the pace of policy rate increases, it could be advantageous to wait until the stance of policy was more clearly in restrictive territory and there were more concrete signs that inflation pressures were receding significantly,” the analysts said.

According to some analysts, a slightly dovish tilt to the minutes is helping gold prices push above the critical physiological level at $1,750 an ounce. December gold futures last traded at $1,750.20 an ounce, up 0.60% on the day.

Although gold is seeing an initial boost as the Federal Reserve looks to adjust its monetary policy tightening, some market analysts note that the terminal rate remains the same. The Minutes showed that some committee members expect the Fed Funds rate to end higher than previous projections.

“Many participants commented that there was significant uncertainty about the ultimate level of the federal funds rate needed to achieve the Committee’s goals and that their assessment of that level would depend, in part, on incoming data. Even so, various participants noted that, with inflation showing little sign thus far of abating, and with supply and demand imbalances in the economy persisting, their assessment of the ultimate level of the federal funds rate that would be necessary to achieve the Committee’s goals was somewhat higher than they had previously expected,” the minutes said.

In its economic projections in September, the central bank saw the Fed Funds rate topping out at 4.6%; however, according to the CME FedWatch Tool, markets see a terminal rate above 5%.

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