Gold Falls Into Negative Territory Following Dec FOMC Minutes
(Kitco News)- The gold market has pushed into negative territory inlate-afternoon activity after the minutes of the December Federal Open MarketCommittee meeting revealed ongoing concerns over low inflation pressures.
While the majority of participants supported a rate hike inDecember, the minutes showed a growing divide within the committee and frustrationover the mystery of low inflation.
The Minutes noted that several committee “expressed concernthat persistently weak inflation may have led to a decline in longer-terminflation expectations; they pointed to low market-based measures of inflationcompensation, declines in some survey measures of inflation expectations, orevidence from statistical models suggesting that the underlying trend ininflation had fallen in recent years.”
Despite what some are describing as dovish-tilt to theminutes, gold prices have pushed into negative territory. February gold futureslast traded at $1,313.50 an ounce, down 0.20% on the day.
Jim Wyckoff, senior market analyst at Kitco.com said that he sees the selloff in gold as more technical with traders taking profits following a record 12-day rally in the precious metal, which pushed prices above $1,300 an ounce.
While the U.S. central bank is still frustrated with the lowinflation environment, the committee said it generally supports a continued gradual rise in interest rates, according to the minutes.
“Most participants reiterated their support for continuing agradual approach to raising the target range, noting that this approach helpedto balance risks to the outlook for economic activity and inflation,” theminutes said.
Adam Button, head of currency strategy at Forexlive.com, said that the report doesn't do much for current interest rate expectations as the market continues to price in a March rate hike.
By Neils ChristensenFor Kitco News
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