(Kitco News) - Gold prices remain under pressure but continue to consolidate above $2,000 an ounce as the Federal Reserve has signaled that its monetary policy has peaked, but it remains in no hurry to ease interest rates, according to the minutes of the January monetary policy meeting.
The Federal Reserve’s committee members noted that risks are becoming more balanced as inflation pressures ease and activity remains robust. According to the minutes, the committee wants to see more confirmation that inflation continues to fall to the 2% target before they start cutting interest rates.
“Most participants noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 percent,” the minutes said. “A couple of participants, however, pointed to downside risks to the economy associated with maintaining an overly restrictive stance for too long.”
The gold market is not seeing much reaction to the Federal Reserve’s monetary policy meeting minutes. April gold futures last traded at $2,034.90 an ounce, down 0.24% on the day.
The minutes have also not impacted market expectations for rate cuts. According to the CME FedWatch Tool, markets see a roughly 30% chance of easing in May. The most likely start to the Federal Reserve’s expected easing cycle remains June.
Jim Wyckoff, senior market analyst at Kitco.com, said the minutes provide no new inflation on the monetary policy following last week’s hotter-than-expected inflation data.
“The marketplace is likely deeming the minutes slightly hawkish, but not unexpected,” he said in a note. “Recent warmer U.S. inflation reports already had the marketplace thinking the Fed will hold off on lower interest rates until the second half of the year, if even then.”
