Fed releases December meeting minutes, gold price still falling $ 40

(Kitco News) Gold remained close to daily lows after the Federal Reserve released the minutes of the December meeting, which showed broad support for the current central bank bond buying program.

During the December meeting, the Fed kept rates unchanged close to zero, while President Jerome Powell emphasized that the central bank will continue its asset purchases until “the job is well and truly done”.

The meeting minutes revealed that all Fed officials supported the current pace of bond buying.

“All participants deemed it appropriate to continue shopping at least at the current rate, and almost everyone is in favor of maintaining the current composition of purchases,” according to the minutes published on Wednesday. “Some participants indicated that they were open to considering buying Treasury bills over longer periods.”

The $ 120 billion monthly purchase pace was maintained until “there was substantial progress” in the central bank’s employment and inflation targets.

There was no significant reaction to the news, with gold prices rising slightly, but still remaining close to their daily lows. February’s Comex gold futures were trading at $ 1,913.80, down 2.08% on the day.

The Fed’s economic projections were updated during the December meeting, with the central bank now expecting the US economy to grow 4.2% in 2021, the unemployment rate to fall to 5% and inflation to reach 1.8%.

There have been no significant changes in the points graph, with rates expected to remain close to zero until 2023.

Powell also noted that in the next four to six months the situation will be difficult.

“Clearly, there will be a need for help there,” said Powell. “We have the flexibility to provide more accommodation … The numbers of coronavirus cases are so high and widespread that it looks like the impact on the economy will happen. You are seeing a slowdown now and during the first quarter of next year. “

Powell added that the situation is expected to improve in the middle of next year, when people will begin to feel comfortable going out and getting involved in a broader level of activities. “During the second half of next year, the economy should show strong performance,” he said.

The minutes also showed that additional adjustments could be made to the bond purchase program in the future.

“Some participants noted that the committee could consider future adjustments to its asset purchases – such as increasing the pace of bond purchases or weighing Treasury bond purchases against those with longer remaining maturities – if such adjustments were considered appropriate” , says the minutes said.