(Kitco News) - The gold market is holding near its session highs and is seeing limited bullish momentum as the minutes from the Federal Reserve’s July monetary policy meeting provided some guidance for investors.
While the Federal Reserve left interest rates unchanged last month, the minutes showed that there was some support for a rate cut.
“All participants supported maintaining the target range for the federal funds rate at 5-1/4 to 5-1/2 percent, although several observed that the recent progress on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at this meeting or that they could have supported such a decision,” the minutes said.
However, in the broader view, economists have said that the minutes continue to lay the ground work for the central bank to cut interest rates next month.
“Participants viewed the incoming data as enhancing their confidence that inflation was moving toward the Committee's objective. The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” the minutes said.
Although the minutes support expectations of a 25 basis point rate cut in September, economists note that they don’t add anything new to the broader outlook.
“There are no big surprises here but this paints a picture of the Fed on track to cut in September,” said Adam Button, head of currency strategy at Forexlive.com.
Markets already see a 100% chance of a rate cut next month and see a roughly 30% chance of a 50-basis point move.
In initial reaction to the minutes, the gold market has managed to recover its losses but is trading in roughly neutral territory. December gold futures last traded at $2,552.30 an ounce, up 0.06% on the day.
