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(Kitco News) – The gold market remains under pressure, falling to session-low after the Federal Reserve said it did not see many benefits from a yield curve control program, according to minutes of the central bank’s monetary policy meeting in July.
Sales pressure in the gold market picked up as the minutes of the July Monetary Policy Meeting show some reluctance on the part of the Fed to edge conditions. December gold futures traded last at $ 1,951.90 an ounce to 3% on the day.
At the same time, the last minutes do not shed much light on all the new initiatives of the central bank. The commission also does not rule out the use of a return if financial circumstances deteriorate.
“Of those participants who discussed this option, most judged that revenue caps and targets would likely provide only modest benefits in the current environment,” the minutes said. “In light of these concerns, many participants judged that revenue caps and targets were not guaranteed in the current environment, but should remain an option that the commission could reassess in the future if circumstances change.”
Although it appears that a program to control the yield curve is ahead of the table, the minutes said the central bank is ready to act as the economy continues to slow.
“Participants reaffirmed their commitment to using the full range of tools from the Federal Reserve to support the U.S. economy in this challenging time,” the minutes said. “They noted that the path of the economy would depend significantly on the course of the virus and that the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near future and many risks to the economic outlook. in the medium term. ”
Not only has the Federal Reserve backed down on the idea of limiting bond yields, but economists note that it appears the Federal Reserve is in a transition period as it awakens its monetary policy response in response to the ongoing COVID-19 pandemic.
“A number of participants note that providing greater clarity regarding the likely path of the target range for the federal fund rate would be appropriate at some point,” the minutes said. More broadly, in discussing the policy outlook, a number of participants noted that completing a revised Statement on Long-Term Goals and Monetary Policy Strategy would be very useful in providing an overarching framework that would help guide the Commission. its future policy actions and communications. ”
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