(Kitco News) -The gold market is holding solid gains above $2,300 an ounce, but is not seeing any new momentum, as the Federal Reserve maintains its restrictive monetary policy stance and warns that inflation remains a stubborn problem.
As expected the U.S. central bank left its fed funds rate in a range between 5.25% and 5.50%. Although economic and inflation risks remain balanced, the central bank acknowledged persistent higher inflation.
“In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective,” the central bank said in its monetary policy statement.
The gold market is not seeing much reaction to the relatively neutral monetary policy stance. June gold futures last traded at $2,316.20 an ounce, up 0.57% on the day.
According to some analysts, the statement shows the Federal Reserve is in no hurry to start its easing cycle as consumer prices remain elevated.
The central bank has been clear that it will only start cutting rates once it is confident that inflation is falling back to its 2% target.
The gold market is holding solid gains above $2,300 an ounce but is not seeing any new momentum as the Federal Reserve maintains its restrictive monetary policy stance and warns that inflation remains a stubborn problem.
As expected, the U.S. central bank left its fed funds rate in a range between 5.25% and 5.50%. Although economic and inflation risks remain balanced, the central bank acknowledged persistent higher inflation.
“In recent months, there has been a lack of further progress toward the Committee’s 2 percent inflation objective,” the central bank said in its monetary policy statement.
The gold market is not seeing much reaction to the relatively neutral monetary policy stance. June gold futures last traded at $2,316.20 an ounce, up 0.57% on the day.
According to some analysts, the statement shows the Federal Reserve is in no hurry to start its easing cycle as consumer prices remain elevated.
The central bank has been clear that it will only start cutting rates once it is confident that inflation is falling back to its 2% target.
Although the Fed is maintaining its restrictive monetary policy for the foreseeable future, market liquidity could start to shift as the Fed slows down its balance sheet runoff.
“Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities,” the central bank said.
