The dollar dropped while gold rose early this morning as the markets reacted to the release of the Federal Reserve’s minutes from its January meeting. The minutes show that Fed officials are more worried about raising interest rates than most of the markets thought. In fact, there was even talk of easing their monetary policy even further. Quoting from the minutes:

A few (members) expressed concern that in some circumstances the public could come to question the credibility of the Committee’s 2 percent goal… Indeed, one participant recommended that, in light of the outlook for inflation, the Committee consider ways to use its tools to provide more, not less, accommodation.”

Could they be talking about initiating another round of quantitative easing? While this dovish stance seemed to hit the financial media as a surprise, it’s precisely what Peter Schiff has been forecasting for months. Also, just as Peter pointed out in his Gold Videocast released this week, the Fed is primarily watching the jobs numbers to determine its policy:

Nonetheless, a number of participants suggested that they would need to see further improvement in labor market conditions and data pointing to continued growth in real activity at a pace sufficient to support additional labor market gains before beginning policy normalization.”

That’s Fed-speak for, “Even though everyone agrees that the employment picture has been great in the past year, we’re still not sure if they’re good enough.” If the economy continues with this sluggish rate of recovery, businesses could be laying off more of their part-time workers, reversing the job gains from last year.

The rise in gold and drop in the dollar wasn’t too dramatic this morning – gold only rose about 0.6% and has since reversed its gains. For the time being, the markets seem to still trust in the supposed economic recovery. However, it’s interesting to note that this mild news about the Fed’s ongoing policy of “patience” in regard to a rate hike spooked the markets just a bit. Imagine what the reaction will be when the Fed comes out and confirms Peter’s suspicions that they have no intention of raising rates this year.