FOMC Minutes Spark Gold and Stock Price Drop, Raise Questions of Further Rate Hikes

Revealed on Wednesday, July 5th, the minutes from the U.S. Federal Reserve’s Open Market Committee (FOMC) meeting indicated a unanimous decision to keep interest rates stable. This decision, in line with market participants’ expectations, set off a chain of events influencing a multitude of markets.

Analyzing the Steady Rates Decision

According to June’s meeting minutes, most participants foresaw no shift in rates at this gathering, thus aligning with the decision taken. The median pathway of the survey did not anticipate any rate hikes until early 2024, but there were differing views with some hinting at the possibility of further tightening in subsequent deliberations.

The committee’s rationale behind the decision was to afford more time to gauge the economy’s progress towards its key goals – maximizing employment and ensuring price stability. Due to a host of factors, the FOMC members exhibited a sense of caution. 

They believed that a temporary pause would offer the committee a window to observe the impacts of the rate hikes, which collectively amounted to 5% points, the most severe since the beginning of the 1980s.

Repercussions on the Gold and Stock Market

Gold prices faced a downward push following the release of the minutes. This was attributable to higher U.S. Treasury yields, a more robust currency, and the hawkish tenor of the minutes. The gold futures contract for August lost $6.80 in the recent trading session, settling at $1922.70.

Also, Wall Street’s principal indices registered minor declines on Wednesday. Investors are gearing up for crucial economic data due in the coming days while examining the Fed’s latest meeting minutes.

Cryptocurrency Market Weathers the Storm

Meanwhile, the cryptocurrency market displayed resilience with a positive trend. Bitcoin saw a considerable climb crossing the $31,000 threshold, Ethereum is close to $1,950, and XRP exceeded the $0.48 level. Even BNB is hovering around $243. As of now, the total crypto market’s worth stands at $1.22 trillion, marking a 1.36% rise over the past 24 hours. Despite this, Tether (USDT) and USD Coin (USDC) are experiencing depegging issues.