During the Asian session on Thursday (May 23), spot gold hovered near a one-week low and is currently trading at 2380.80 US dollars/ounce. The price of gold fell by more than 40 US dollars on Wednesday, hitting a low of 2374.84 US dollars/ounce, closing at 2378.44 US dollars/oz. The minutes of the Federal Bank's last meeting showed that policymakers acknowledged disappointment with recent inflation readings, which helped the US dollar and US bond yields rise, causing gold bulls to make profits and clearly put pressure on the price of gold.

US futures closed 1.4% lower on Wednesday, and the settlement price was $2392.90. The US dollar index rose 0.3% to a one-week high on Wednesday, making gold more expensive for investors holding other currencies.

Jim Wyckoff, senior analyst at Kitco Metals, said, “You're seeing week-long closed positions, with some short-term futures traders closing profitably; all of this is not unusual in a market that has repeatedly reached new highs.”

The minutes of the Federal Reserve's April 30 to May 1 show that officials believe it will take longer than previously anticipated to have greater confidence that inflation will fall back to 2%.

Recently, economic data showed a downward trend in inflation, but Fed policymakers said they should wait a few more months to ensure that inflation is actually on track to return to the 2% target before cutting interest rates.

Federal Reserve Meeting Minutes: The process of falling back in inflation may take longer than previously thought

The newly released minutes of the Federal Reserve meeting mentioned that participants indicated that they still expect the inflation rate to return to 2% in the medium term. However, recent data has not increased their confidence in 2%, so they think the process of falling back in inflation may take longer than previously thought.

Meeting minutes show that although improvements in the supply chain have supported a decline in commodity price inflation over the past year, participants commented that the pace of such improvements is expected to be slower and may slow the progress of inflation. Several participants commented that the growth in aggregate demand may have to slow from strong growth in recent quarters to allow inflation to move sustainably towards the Commission's goals.

Nomura Securities will postpone the expected time for the Federal Reserve's first interest rate cut until September

After the Federal Reserve announced the minutes of the meeting, Nomura Securities economists adjusted their forecast for when the Federal Reserve will cut interest rates, saying “the threshold for cutting interest rates seems to have been raised.”

They now expect the Federal Reserve to cut interest rates for the first time in September instead of July as previously predicted.

Economists David Seif, Aichi Amemiya, Jeremy Schwartz, and Ruchir Sharma wrote in a report: “Recent economic growth and inflation data are dovish, but the market has ruled out the possibility of interest rate cuts in July, and Federal Reserve officials also emphasized patience.”

They added: “We believe recent inflation data faces a moderate upward risk, which increases the possibility that the first rate cut will be delayed even beyond September.”

Nomura continues to expect a second rate cut in December and then four more times in 2025.

Goldman Sachs CEO predicts that the Federal Reserve is unlikely to cut interest rates this year, and Europe will cut interest rates

Before the minutes of the meeting were released, Goldman Sachs CEO David Solomon (David Solomon) said on Wednesday that he does not expect the Federal Reserve to cut interest rates this year.

“I still think the number of interest rate cuts is zero,” Su Dewei said at a Boston College event. “I think we're ready for more stubborn inflation.”

Before he made this statement, Fed policymakers said on Tuesday that the Federal Reserve should wait a few more months to ensure that the inflation rate actually returns to the target trajectory of 2% before cutting interest rates.

Su Dewei's remarks are in stark contrast to the market's expectations that the Federal Reserve will cut interest rates at least once this year. On Wednesday, after the minutes of the Federal Reserve's April 30 to May 1 policy meeting were released, traders reduced their bets on the Fed cutting interest rates more than once this year, because the minutes showed that interest rate makers believed that inflation might take longer than previously thought to ease.

Su Dewei told about 150 business executives and Boston College students that although he believes the US economy is fundamentally quite strong, not all Americans are experiencing the effects of economic growth or inflation in the same way.

Su Dewei also said that he expects Europe to cut interest rates this year because the region is struggling with a “more sluggish economy.”

He expressed concern about a range of adverse factors facing global economic growth, including inflationary pressures and geopolitical issues. “Geopolitical fragility is an issue we've had to face for some time.”

The minutes of the Federal Reserve meeting boosted the dollar to a one-week high

The dollar index rose to a one-week high on Wednesday, so the records of the previous Federal Reserve meeting showed that policymakers acknowledged disappointment with recent inflation readings.

“The minutes confirm what most traders were already thinking before the US CPI report was released a week ago,” said Amarjit Sahota, head of foreign exchange risk management firm Klarity FX in San Francisco. “In other words, FOMC members are increasingly frustrated by the disappointing inflation data for the first quarter, but they think the policy is restrictive enough.”

He said, “The situation where some officials are willing to further tighten policy has further boosted the dollar since the minutes of the meeting were released.”

Analysts said that although the market is still hopeful that US inflation will continue to cool down, the personal consumption expenditure (PCE) inflation data to be released on May 31 will be a key test.

The US dollar index reached a high of 104.90 on Wednesday, a new high since May 15, closing at 104.94, an increase of about 0.3%.

US Treasury yields rise, Federal Reserve officials worry about rising inflation

US Treasury yields also followed the dollar's rise on Wednesday.

Subadra Rajappa, head of US interest rate strategy at Societe Generale Bank, said: “The minutes of the meeting seem a bit more hawkish than what we heard Powell's remarks at the post-meeting press conference.”

“They seem clearly concerned about inflation, and they are more open to raising interest rates if necessary,” Rajappa said. “This means maintaining a policy of keeping interest rates high for a longer period of time.”

Data released since the Federal Reserve meeting showed that inflation cooled down in April, consumer price increases fell short of expectations, and the slowdown in US employment growth also exceeded expectations.

However, in recent statements, Fed policymakers emphasized that before cutting interest rates, it will be necessary to wait a few more months to ensure that inflation is actually on track to return to the 2% target.

Angelo Manolatos, macro strategist at Wells Fargo Bank, said, “The April employment and consumer price index (CPI) are two good data points for the interest rate market. However, the Federal Reserve has told us they need more data to consider real interest rate cuts, which makes sense given the strong data for the first quarter.”

Federal funds rate futures traders expect to cut interest rates by a total of 40 basis points this year. The first rate cut may be in September.

The Federal Reserve's policy currently depends largely on data, and the market may consolidate while awaiting May's employment data and inflation data.

The Federal Reserve will hold its next meeting on June 11-12, at which time it will release the latest economic and interest rate forecasts.

The 10-year Treasury yield rose 2 basis points to 4.434% at the end of the session on Wednesday. Interest rate sensitive two-year Treasury yields rose 5 basis points to 4.8796% on Wednesday.

“Federal Reserve microphone”: Due to a setback in inflation progress, Fed officials expect to wait longer to cut interest rates

“Federal Reserve microphone” Nick Timiraos wrote that at a recent meeting, Federal Reserve officials concluded that they need to keep interest rates at current levels longer than previously anticipated. Last month, the US inflation data was disappointing for the third month in a row.

According to the latest meeting minutes, although officials still believe that interest rates are high enough to curb economic activity and reduce inflation, they suggest that they are less sure about the extent to which policies are restrictive.

An unknown number of officials mentioned that they are willing to tighten the policy further if the risk of inflation makes it reasonable to tighten the policy. Price pressure slowed markedly in the second half of last year. Federal Reserve officials hinted in March that if there were another month or two of moderate inflation, they might be ready to start cutting interest rates.

However, a series of data for the first quarter shows that price pressure in the economy is heating up, and unless the job market weakens unexpectedly, the Federal Reserve has been forced to put aside any consideration of starting to cut interest rates in the next few months.

Technical analysis

Resistance: 2382.15; 2394.93; 2405.71; 2414.95;

Support: 2374.84; 2368.78; 2363.64; 2351.74;

Looking at the daily chart, the red bar shrinks after the top of the MACD diverged, and the red bar collapsed after KDJ sent an overbought signal. The gold price market reached the 2,400 mark, breaking the 5-day EMA before 2404. The short-term gold price faces the risk of further correction. The short-term target is based on the 2450 mark, and the 21-day EMA support is also near this position. The aggressive target looks around the May low of 2277, and the lower Bollinger line support is also near this position.

Future market outlook

On this trading day, we will focus on the market's further interpretation of the minutes of the Federal Reserve's meeting, pay attention to changes in the market's expectations for the Fed's interest rate cut, pay attention to the speeches of Federal Reserve officials, pay attention to changes in the number of initial US jobless claims and manufacturing PMI data, and pay attention to the total annualized amount of new home sales and news related to the geographical situation after the April seasonal adjustment.

At 07:10 Beijing time, spot gold is 2381.28 US dollars/ounce on the western side.