Gold Prices Off Highs Following Hawkish Fed Minutes
(Kitco News)- The gold market is off its highs and under pressurefollowing the release of the minutes of the March Federal Open Market Committeemeeting.
According to some analysts, the minutes have a hawkish toneas most central bank committee members agreed that the nation's economicoutlook has strengthened in recent months. At the same time, the committee seesinflation rising in coming months.
"A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected," the minutes said.
While gold continues to hold gains, prices are off their highs in reaction to the latest Federal Reserve data. June gold futures lasttraded at $1,354.80 an ounce, up 0.65% on the day.
Of course the committee did highlight risks to the U.S. economy, particularly the threat of a trade war.
"Participants did not see the steel and aluminumtariffs, by themselves, as likely to have a significant effecton the national economic outlook, but a strong majorityof participants viewed the prospect of retaliatory tradeactions by other countries, as well as other issues anduncertainties associated with trade policies, as downsiderisks for the U.S. economy," the minutes said.
Andrew Grantham, senior economist at CIBC World Markets, said that data could help boost the U.S. dollar, which in turn would be negative for gold.
"The apparent greater confidence regarding theinflation and growth outlook should be modestly positive for the US$," he said.
By Neils ChristensenFor Kitco News
Follow neils_C
nchristensen@kitco.comwww.kitco.com 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.