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The China Earthquake Networks Center officially determined that a 6.4-magnitude earthquake occurred in the southern part of the East Pacific Mid-Range at 01:43 on May 21, with a focal depth of 10 kilometers.On May 21, market analysts stated that the minutes of the Federal Reserves April meeting revealed that as the conflict in Iran pushes up inflation, a growing number of officials raised concerns about a tightening stance. At the previous meeting in March, "some" participants indicated that the Fed had ample reason to provide balanced policy guidance, suggesting the next move could be either a rate hike or a rate cut, contrary to the prevailing view that a rate cut would eventually occur. In April, this group expanded to include "many" officials who preferred more neutral wording in the policy statement. The April minutes also noted that, overall, officials generally believed that interest rates would need to remain stagnant for longer than they had initially anticipated.On May 21, Federal Reserve officials concerns about the Iran war pushing up inflation intensified last month, with a growing number of officials saying the Fed should pave the way for a possible interest rate hike. This indicates that incoming Fed Chairman Warsh will be taking over an increasingly hawkish policy-making team. Furthermore, most policymakers at the April meeting indicated that further policy tightening might be necessary if inflation continues to remain above the 2% target. The minutes show that "in response to this possibility, many participants indicated they preferred to remove language suggesting a dovish bias in future interest rate decisions." These minutes, considered "the most divisive in generations," further reveal the shift in the two camps welcoming Warsh: a growing hawkish camp wary of inflation triggered by the Iran war and opposed to any discussion of rate cuts, and a waning dovish camp still inclined towards rate cuts. The main reason driving policymakers further towards a hawkish stance remains inflationary pressures, exacerbated by the war. The minutes show that the April meeting was the second consecutive meeting where more policymakers believed that a rate hike might be necessary if inflation continues to remain above the target.U.S. Centers for Disease Control and Prevention officials: An American infected with Ebola has arrived in Germany; other high-risk U.S. citizens are being transferred from the Democratic Republic of Congo to Germany and the Czech Republic.U.S. Centers for Disease Control and Prevention officials: An Ebola patient in the United States has been hospitalized and is in stable condition.

Gold Recovers As Fed Minutes Confirm Forecasts

Charlie Brooks

May 26, 2022 09:36

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Gold recouped some of its losses on Wednesday as minutes from a Federal Reserve meeting indicated that the central bank would maintain its plan to raise interest rates by a half-point at its June and July meetings.


At 4:15 p.m. ET (2015 GMT), spot gold declined 0.7% to $1,853.80 per ounce, after falling 1.3% to $1,844.49 earlier in the session. Gold futures in the U.S. closed down almost 1 percent at $1,846.3.


According to the minutes of the Federal Reserve's policy meeting on 3-4 May, all participants supported a half-percentage-point rate hike to battle inflation that threatened to surge without central bank intervention.


After the minutes were released, gold reduced losses, but remained down, having been lower for the majority of the day due to a higher dollar.


While the Fed minutes were mostly in line with market expectations, the Fed did indicate that 50 basis point hikes would likely be appropriate for the June and July meetings, according to Standard Chartered analyst Suki Cooper (OTC:SCBFF). The market will likely continue to focus on inflation data and indications of reducing cost pressures.


Even while gold is commonly viewed as a hedge against inflation, rate rises diminish its attractiveness since they tend to increase bond rates, increasing the opportunity cost of keeping zero-yield metal.


Christine Lagarde, president of the European Central Bank, has secured critical allies for her proposal to lift rates out of negative territory this summer.


Spot silver lost 0.5% to $21.99 per ounce, platinum fell 0.6% to $948.95 per ounce, while palladium climbed 0.1% to $2,002.22 per ounce.


Analysts at Commerzbank (ETR:CBKG) wrote in a note, "Platinum and palladium are being restrained by the continued challenges in the automobile industry, which is dampening demand for these precious metals."

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