(Kitco News) - The gold market is not seeing any significant reaction to recent comments from U.S. central bankers, who appear united in their focus on inflation. While interest rates may not be going higher, they are in no rush to start the much-anticipated easing cycle.
Gold prices are holding above $2,400 an ounce, even as they face some technical selling pressure after hitting a fresh all-time high on Monday; the precious metal is maintaining a critical psychological level as members of the Federal Reserve provide little guidance on U.S. monetary policy.
In opening remarks during an online event hosted by the Peterson Institute, Christopher Waller, Governor of the Federal Reserve, said that the central bank’s restrictive monetary policy is cooling down the economy and inflation, but more work remains to be done.
“The economy now seems to be evolving closer to what the Committee expected. Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” Waller said in his prepared remarks.
Atlanta Federal Reserve President Raphael Bostic, speaking at a conference in Atlanta, said that he is in no hurry to cut interest rates and would like to wait longer to ensure inflation does not start to fluctuate.
He stated that the central bank’s priority is to get inflation back to the 2% target.
The gold market is taking these latest comments in stride. June gold futures last traded at $2,432.70 an ounce, down 0.23% on the day.
While the Federal Reserve’s reluctance to signal a rate cut anytime soon has created some volatility in the gold market, many analysts have said that central bank monetary policy has been relegated to a secondary role in the marketplace.
Analysts have said that investors are largely ignoring the opportunity costs of holding gold as they hedge against the ongoing inflation threat and economic uncertainty.
Although the Fed is not planning to cut rates next month, it is certainly not planning to raise them any further.
“Central bankers should never say never, but the data suggests that inflation isn't accelerating, and I believe that further increases in the policy rate are probably unnecessary,” Waller said in his remarks.
Analysts have stated that a peak in interest rates remains positive for gold.
