Gold Price News: Gold Down 1% in Wake of More Hawkish Federal Reserve Meeting Minutes

Published on January 9, 2022

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Gold Price News: Gold Down 1% in Wake of More Hawkish Federal Reserve Meeting Minutes

Gold price fell to $1,808 an ounce in the wake of the release of the minutes of the December Federal Reserve meeting, having hit an intra-day high of $1,829. Silver price fell to $22.72 an ounce from an intra-day high of $23.26.

Gold and silver have continued to sell off this morning with gold trading as low as $1,794 and silver trading down to $22.14.

The FOMC minutes showed a much more hawkish Fed than markets had been expecting.

The minute suggests that the Fed could be very aggressive in reducing their $9tn balance sheet.

They specifically highlighted their concerns with inflation (no longer transitory).

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The minutes did not put any timeframe on when they might begin this reduction. However, they are not scheduled to stop buying assets until February.

The speed with which they are expected to hike rate also looks to be quickening too.

More Aggressive Tightening and Massive Rate Hikes

Comments in the minutes are suggesting the possibility of much faster rate hikes with markets now pricing in a better than 75% chance of the first hike in coming in March of this year, just 2 months away.

They are also pricing in a 60% chance of a second rate hike in June. Also, an over 50% chance of a third in November.

December interest rate futures are even showing a 40% chance of a 4^th in December.

There were only some hints as to when The Fed might begin the reduction of its balance sheet and how it might achieve this, with some officials preferring to rely more on balance sheet reduction than rate hikes to remove excess monetary accommodation.

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