The minutes, published on Wednesday, revealed that the Fed was becoming increasingly worried over the effect of its new monetary policy tightening on the economy and inflation. This year, the central bank roamed its benchmark rate by 375 basis points (bps). It had four successive hikes of 75 bps.
But markets are now pricing in an almost 80% probability that the central bank will increase rates by a somewhat smaller 50 bps in December.
Spot gold climbed 0.2% to $1,753.40 an ounce. Meanwhile, gold futures climbed 0.2% to $1,753.50 an ounce by 19:05 ET (00:05 GMT). Both instruments bounced approximately 0.6% behind the publication of the minutes on Wednesday, while the dollar plunged 1%.
Fed members are still determining the level at which U.S. interest rates will peak throughout this hiking cycle. They keep in mind that inflation is trending well beyond the central bank’s 2% yearly target.
Markets will observe November’s CPI inflation readings, expected next month, to measure whether inflation is steadily withdrawing in the country. However, the stability of the labor market and consumer spending suggests that inflation may be lower than expected in the coming months.
Low Dollar
Nevertheless, the Fed’s possibility of smaller rate hikes is positive for metal markets, given that intense interest rates this year greatly pushed up the opportunity price of holding non-yielding assets.
Platinum futures climbed 0.2%, while silver futures rebounded 1.2%.
Gains in industrial metals were somewhat subdued as the space grapples with restricting demand in major importer China.
Liability in the dollar supported prices of the red metal. However, worries over China’s most destructive coronavirus outbreak yet wasted a broader appetite for copper. The country presented new restrictions in a few major cities this month as it faces a record-high rise in daily infections.
Demand headwinds from China have offset signs of tighter copper supplies this year.
