US Federal Reserve officials discuss 'slightly steeper' future rate hikes

US Federal Reserve officials signalled that the central bank may have to accelerate the pace of future rate hikes amid stronger economic growth and inflation, according to the minutes of the Fed's latest monetary policy meeting.

"A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to two per cent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected," said the minutes of the Fed's March 20-21 meeting released on Wednesday.

At that meeting, the Fed raised its target range for the federal funds rate to 1.5-1.75 per cent, the first rate hike of 2018, reports Xinhua.

It was also the first meeting led by Fed Chairman Jerome Powell, who took the helm of the central bank in February.

Gold sparkled in 2017 despite record surge in US stocks, 3 Fed rate hikes

Gold is opening the new year on the front foot. Bullion advanced for an eighth straight day to head for the longest stretch of gains since mid-2011, building on an annual surge that pushed the precious metal to its best year in seven as the dollar weakened.

Bullion for immediate delivery advanced as much as 0.5 per cent to $1,309.32 an ounce, the highest level since September 26, and was at $1,309.06 at 6:37 am in London, according to Bloomberg generic pricing. Last year, the commodity climbed 14 per cent as the Bloomberg Dollar Spot Index lost 8.5 per cent to post the steepest decline since at least 2005.

Gold's strong run in 2017 came even as US stock markets surged to records and the Federal Reserve increased interest rates three times amid signs of an improving economy. Fed policy makers are projecting another three hikes in 2018, while other central banks around the world have also shifted toward a tighter monetary stance, with the European Central Bank planning to halve its asset purchases starting this month.

"As global complacency over the trajectory of US rates continues to be astoundingly low, precious metals, in general, should continue to benefit," Jeffrey Halley, senior market analyst at Oanda Corp in Singapore, said in a note. "The old adage that the market can stay irrational longer then you can stay solvent appears to be alive and well in the gold market at the moment."
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Gold climbs ahead of US Fed Reserve meet, pick for Janet Yellen replacement

Gold climbed briefly back above $1,280 an ounce on Wednesday as caution ahead of this week's confirmation of the new Federal Reserve chair and a policy statement from the bank prompted some to close out bets on falling prices.

Fed Governor Jerome Powell is widely tipped to take over from incumbent Janet Yellen at the head of the U.S. central bank next year. He is seen as a less hawkish and therefore more gold friendly choice than his main challenger John Taylor, a Stanford University economist.

A statement at the end of the Fed's latest policy meeting due later will also be closely watched for clues on the outlook for U.S. interest rates. While the bank is expected to leave rates unchanged, investors will be watching for any indications that it will press ahead with another increase next month.

Spot gold was up 0.5 percent at $1,278.11 an ounce at 1035 GMT, having earlier peaked at $1,280.87. Its upward move accelerated after it broke through its 100-day moving average at $1,275 an ounce, a key chart level.

The metal has fallen for the last two weeks as the dollar has strengthened, taking it to a three-week low on Friday. While prices have recovered, they remain within a less than $15 an ounce range so far this week as traders await clarity on U.S. monetary policy.
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