Price of Gold Fundamental Daily Forecast - Steady after Fed Minutes Show No Unexpected Developments

Gold futures are marginally higher early on Thursday compared to the previous session's closing price. Prices were under pressure before to the release of the Federal Reserve's most recent meeting minutes, but steadied by market close following the Fed's announcement.

The price movement indicates that gold dealers anticipated the Fed's decision and are now prepared to study economic data that may convince officials to rethink their first response to rising inflation. One answer may be optimistic while the other may be negative. However, it might be months before we determine whether the Fed's attempts to tighten monetary policy are effective, which could result in a trading range for gold prices.

Fed Minutes Suggest Central Bank Will Not Become More Aggressive

After the minutes of the Federal Reserve's monetary policy meeting on May 3-4 indicated that the central bank would raise interest rates by 50 basis points in June and July to combat inflation, which they agreed had become a major threat to the economy's performance, gold futures recouped a portion of their dollar-driven losses late Wednesday.

The announcement may have been favorable for gold since traders no longer needed to fear a 75-basis-point rate rise that they had feared for the past two weeks. In addition, it appeared from the minutes that the Fed would wait until its September meeting before making any big revisions.

Members of the Federal Open Market Committee (FOMC) concur that the U.S. economy is robust enough to absorb two 50-basis point increases in interest rates.

Daily Forecast

Gold traders may now focus on the movement of U.S. Treasury rates and the U.S. Dollar, as the minutes have been completed. The two markets that ultimately decide gold price direction.

Inflation, economic growth, and employment statistics will act as yield-moving triggers during the next two months. To review the Fed's objectives. Policymakers seek to boost interest rates sufficiently to reduce inflation while preserving economic growth and a robust job market.

From now until September, when the Fed evaluates the impact of the June and July rate rises, U.S. economic reports are expected to influence gold prices.

As early as Thursday, when the U.S. Preliminary GDP and Weekly Unemployment Claims data are out, gold dealers will be able to observe this in action.

The GDP numbers from the first quarter are outdated, however the initial claims data are current. The market anticipates a reading of 217K. Anything greater will be cause for alarm, but will not derail Fed goals. However, it may prompt some of the weaker gold bears to reduce their short holdings.