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May 22, 2024
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Precious Metals

Gold prices remain under pressure as the Fed minutes signal rate cuts in 2024

The gold market remains under significant selling pressure even as the Federal Reserve continues to signal that it is ready to cut interest rates later this year, according to the minutes of the December monetary policy meeting.

While the central bank kept interest rates unchanged last month, updated economic projections indicated that the Committee sees potentially three rate cuts in 2024. However, the minutes also noted that while rates will be coming down, the Federal Reserve is still in no hurry to ease monetary policy anytime soon.

“Almost all participants indicated that reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024,” the minutes said.

“Several also observed that circumstances might warrant keeping the target range at its current value for longer than they currently anticipated. Participants generally stressed the importance of maintaining a careful and data-dependent approach to making monetary policy decisions and reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee’s objective,” the minutes also said.

The gold market is not seeing much reaction to the central bank’s monetary policy meeting minutes. Spot gold has seen solid selling pressure Wednesday, as prices dropped below initial resistance at $2,050 an ounce. The precious metal last traded at $2,039.10 an ounce, down nearly 1% on the day.

Although the U.S. central bank remains vigilant regarding the inflation threat, the minutes showed some committee members see risks starting to ease.

“Participants saw upside risks to inflation as having diminished but noted that inflation was still well above the Committee’s longer-run goal and that a risk remained that progress toward price stability would stall,” the minutes said.

The minutes also highlighted growing concerns over the economy as the central bank maintains restrictive monetary policies.

“A few suggested that the Committee potentially could face a tradeoff between its dual-mandate goals in the period ahead,” the minutes said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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