Gold prices remain down as Fed stays committed to reducing inflation even as economy slows – FOMC minutes

The gold market remains under pressure but is not seeing any new price action as the Federal Reserve remains committed to tightening its monetary policy to cool down the growing inflation threat.

Although the U.S. central bank sees growing downside risks to the economy, the minutes of the September monetary policy meeting show that the committee remains focus on brining inflation down by raising interest rates.

“Participants reaffirmed their strong commitment to returning inflation to the Committee’s 2 percent objective, with many stressing the importance of staying on this course even as the labor market slowed,” the minutes said.

According to some market analysts, the latest minutes did not reveal much new information on U.S. monetary policy.

“I don't see much here that's a surprise. The Fed and market are aligned with hiking to around 4.75% and then pausing. Markets are largely unmoved on the headlines,” said Adam Button, chief currency strategist at Forexlive.com.

The gold market has largely ignored the hawkish sentiment in the minutes. December gold futures last traded at $1,683 an ounce, down 0.18% on the day.

The minutes also reiterated the Federal Reserve’s outlook that even if the pace of rate hikes slow, the central bank will maintain the restrictive level for some time.

“Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action. Several participants underlined the need to maintain a restrictive stance for as long as necessary, with a couple of these participants stressing that historical experience demonstrated the danger of prematurely ending periods of tight monetary policy designed to bring down inflation,” the minutes said.

By Neils Christensen

For Kitco News

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