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Yesterday, the minutes of the Federal Reserve’s September meeting were released. What do they say about the Fed’s stance and what do they mean for the gold market?

The main message of the recent minutes is that a September decision to not raise interest rates and wait for more evidence was a close call:

“Among the participants who supported awaiting further evidence of continued progress toward the Committee’s objectives, several stated that the decision at this meeting was a close call.”

So, we had three dissenters (George, Mester and Rosengren) who preferred to hike immediately, while doves also wanted to move, but only a bit later after stronger evidence of continued progress toward the Committee’s statutory objectives. But the case for a rise clearly strengthened and the Fed is likely to hike relatively soon (read: in December), unless there is some major negative shock. Indeed, it was pointed out twice:

“Some participants believed that it would be appropriate to raise the target range for the federal funds rate relatively soon if the labor market continued to improve and economic activity strengthened”.

“Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as the Committee expected”.

Initially, the release of minutes from the last FOMC minutes was positive for gold, as the price of the yellow metal rose from $1,252 to almost $1,256. This is probably because the minutes were less hawkish than expected. There was just little revelatory information in the publication as investors had already known from the September statement that the Fed was divided, but generally leaned towards a hike in December.

To sum up, the September FOMC minutes did not bring anything new, so their impact for the gold market should be muted. Since they did not strengthen the hawkish message (the market odds of a December hike moved little), gold caught its breath for a while. However, investors should expect further regional Fed presidents’ talking about raising interest rates this year, which should exert downward pressure on gold.