Shares of SPDR Gold (GLD) are up by 2% since the beginning of the month. The recent release of the minutes of the FOMC didn’t move the precious metal ETF from its current price range. Let’s review the latest minutes and the changes in the physical demand for gold and its relation to GLD.
The hawkish side of the FOMC
The minutes of the last meeting were published and didn’t surprise the markets. The hawkish tone remained with the FOMC members voicing moderate concern over the U.S. inflation, but not enough to do something about it.
In the previous meeting, FOMC member Narayana Kocherlakota was against the vote to end QE3. The minutes revealed other FOMC members didn’t lean towards Kocherlakota and James Bullard’s dovish side. The term “considerable time”
FOMC members weren’t too concern over the expected slowdown in China, Europe and Japan. The members continue to see steady improvement in the U.S. labor market including “employment gains in several parts of the country, with relatively few pointing to emerging wage pressures”.
Also, the minutes of the FOMC meeting showed that the members aren’t concerns with a stronger U.S. dollar, which is another issue that could hold back the progress of GLD.
The tone of the minutes was expected to be a bit more dovish to balance out the hawkish tone in the last statement – this, however, didn’t seem to be the case.
The initial reaction of GLD was a fall in price only to bounce back the next day.
For the rest of the report you can see it at Seeking Alpha