(Kitco News) - The gold market continues to hold its ground even as the Federal Reserve strikes a more hawkish tone due to stubborn inflation pressures, according to the minutes from the December monetary policy meeting.
Following its last meeting in 2024, the Federal Reserve cut rates by 25 basis points but signaled that it expects to cut rates only twice in 2025; in September, the central banks forecasted four rate hikes.
Although inflation pressures have eased over the past year, the minutes show that the central bank committee remains concerned about prices.
“Participants expected that inflation would continue to move toward 2 percent, although they noted that recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated. Several observed that the disinflationary process may have stalled temporarily or noted the risk that it could,” the minutes said.
“Almost all participants judged that upside risks to the inflation outlook had increased,” the minutes added
The minutes also showed that the central bank’s is questioning how much it needs to ease as the economic activity remains relatively robust.
“In discussing the outlook for monetary policy, participants indicated that the Committee was at or near the point at which it would be appropriate to slow the pace of policy easing. They also indicated that if the data came in about as expected, with inflation continuing to move down sustainably to 2 percent and the economy remaining near maximum employment, it would be appropriate to continue to move gradually toward a more neutral stance of policy over time. Some participants observed that, with the target range for the federal funds rate having been lowered a total of 100 basis points with this meeting’s decision, the policy rate was now significantly closer to its neutral value than when the Committee commenced policy easing in September,” the minutes said.
The gold market has taken the hawkish tone of the minutes in stride as it continues to hold in positive territory. Spot gold futures last traded at $2,659.70 an ounce, up 0.43% on the day.
