Gold mixed in muted reaction to foreseen FOMC minutes

Gold is currently trading at 1221.00, with a high of 1229.05 and a low of 1217.40 within a muted reaction to the FOMC minutes. 

FOMC Minutes: Policymakers saw recent increase in import prices as consistent with inflation trend in medium term

However, having heard the core members speak since the June meeting and with Yellen’s Congressional testimony coming up next week, the reactions could have been foreseen in the absence of any surprises. Gold was indeed mixed on the release as traders were scrutinising the minutes to get a better handle on the timing of a future rate hike and the start of the balance-sheet unwinding that may begin before year-end.

The key notes form the minutes are as follows:

• Most Fed policymakers viewed recent softness in inflation data has had little bearing on inflation trend -minutes from June 13-14 meeting. 
• Several Fed policymakers saw a recent increase in import prices as consistent with inflation rising in the medium term.
• Several Fed policymakers were concerned recent softness in inflation might persist due to limited pass-through from resource utilisation.
• Several Fed policymakers wanted to announce start of balance-sheet trimming within a 'couple of months,' others wanted to wait until later in 2017 
• Fed Chair Janet Yellen suggested announcing new approach to balance sheet plan at June 13-14 meeting.
• Fed policymakers discussed possible reasons why financial conditions had not tightened following hikes in fed funds rate. 
• Almost all Fed policymakers supported June hike; one wanted to wait until inflation rose.

The Fed funds futures odds at additional hike 2017 are now at 60%, Gold is stable between 1220.60/1221.87 on the last ten-minute stick at the time of writing. The key round number levels to the downside are 1217, 1214 and 1200 while to the upside, 1250 and 1279 and 1296 double top 2017 highs.