Gold price futures are trading lower on Thursday, shortly before the opening of the regular session. The market is once again posting an inside move that shows investor indecision and impending volatility. Silent responses to the Fed’s minutes yesterday are also keeping investors dry their powder before Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Central Bankers Symposium on Friday.
At 09:29 GMT, December Comex gold is trading $1508.90, down $6.80 or -0.46%.
Fed Minutes Reveal Nothing New: The minutes of the Fed’s July meeting, released at 18:00 GMT on Wednesday, showed Federal Open Market Committee (FOMC) members were divided over whether to cut interest rates, but were united in wanting to signal they were not on a preset path to more easing.
The summary indicated that policymakers viewed the move as a “mid-cycle adjustment,” an expression Powell used in a press conference afterward that was seen as contributing to a stock market sell-off after the July 30-31 meeting.
“In their discussion of the outlook for monetary policy beyond this meeting, participants generally favored an approach in which policy would be guided by incoming information and its implications for the economic outlook and that avoided any appearance of following a pre-set course,” the minutes stated.
The minutes went on to say that “most participants” saw the quarter-point cut “as part of a recalibration of the stance of policy, or mid-cycle adjustment” in response to changing conditions.
“Many participants suggested that the nature of the multiple risks they chose to weigh on the economy, and highlighted the absence of clarity on how to address those risks, the need for policy makers to remain flexible and focused on the implications. Outlook Data to come, ”Minutes said.
The minutes stated that “a couple” members wanted a 50 basis point cut, primarily based on weak inflation readings. At the same time, “many” made no move, stating that the risk had diminished since the June meeting.
The minutes stated that those who voted in favor of the cut felt “the overall state of the policy would be better to help counter the effects of better global growth and uncertainty of trade policy than any other downside risk from those sources” Insurance against, and in the event of otherwise promoting a rapid return of inflation for the committee’s 2 percent symmetric purpose. “
Daily Forecast: We expect to see a slight move in the gold market today before Powell’s speech on Friday. Based on the brief reversal in the bond market yesterday after the release of the Fed’s minutes, it is clear that bond investors still fear the Fed will not be aggressive enough to cut its rate to save the economy.
The current price of gold reflects a 25 basis point rate cut in September, the market price. So to show Powell that the Fed is going to make another cut in October or December ready to generate another surge in gold price.
Also, if Powell is extremely dovish, the stock may explode upwards. This can help limit the gains in the gold market. Essentially, gold may have limited profits since trading a little compared to other markets or price may go down if Powell is too hawkish, or even going to be dovish. He hit it right to support just one rally.
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