Fed releases minutes of December meeting, gold price is still down $ 40

(Kitco News) Gold stayed near daily lows after the Federal Reserve released the minutes of its December meeting, which showed broad support for the central bank’s current buy-back program.

At its December meeting, the Fed kept interest rates unchanged around zero, while Chairman Jerome Powell emphasized that the central bank will continue to buy assets until “the work is done”.

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

“All participants felt that it would be appropriate to continue these purchases at least at the current pace, and almost all were in favor of maintaining the current mix of purchases,” said the minutes published Wednesday. “A number of participants indicated that they were open to weighing purchases of treasury bonds towards longer maturities.”

The monthly purchase rate of $ 120 billion would be maintained until “substantial further progress” was made on the central bank’s employment and inflation targets.

There was no significant reaction to the news, with gold prices rising slightly but still staying close to their daily lows. February Comex gold futures last traded at $ 1,913.80, down 2.08% one day.

The Fed’s economic projections were updated at its 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 come in at 1.8 %.

There were no significant changes to the dot plot, with rates expected to remain close to zero through 2023.

Powell also noted that the situation will be tough for the next four to six months.

“Obviously, help will be needed there,” Powell said. “We do have the flexibility to provide more housing… The number of coronavirus cases is so high and widespread that it looks like the impact on the economy will occur. You see some delay now and in the first quarter of next year. “

Powell added that the situation should get better by the middle of next year, when people start to feel comfortable going out and engaging in a broader level of activities. “The economy should perform strongly in the second half of next year,” he said.

The minutes also showed that further 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 securities purchases or weighting Treasury purchases towards those with longer remaining maturity – if such adjustments became appropriate. deemed, ”the minutes said.