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The FOMC minutes later today will be the main focus ahead of the US labor market reports due on Friday. On the back of the Fed holding rates steady last month, while signaling that further tightening might still be warranted, traders will be keen to receive the details of the meeting. Specifically, traders will be looking for any signs that point toward, or away from, a hike in July. The rates market is currently pricing around a 90% chance of a .25% hike in July. Tonight’s minutes might therefore see those odds rising up to a hike being fully priced in, sending USD higher while dragging gold lower near-term. Alternatively, if tonight’s minutes err on the dovish side and rate hike pricing for July weakens, USD will likely weaken too, allowing gold room to run higher.
 

Key Focus into FOMC Minutes

The key takeaway from the minutes was that the Fed will move into a data-dependent stance now, meaning that incoming data will determine its decisions at each meeting. As such, Friday’s data will likely be more market-moving, ahead of the next inflation report due next week. Additionally, hawkish Fed comments since that last meeting, particularly from Fed’s Powell mean the minutes might have lost a little relevance. With this in mind, traders should mainly look to see how unified the discussions were and how much dissent there was, which opens up more two-way risk ahead of the next FOMC.
 

Technical Views

Gold

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Gold prices continue to trade in the green ahead of the minutes. The recovery rally of the last 5 trading days has yet to test the 1973.51 level, however, which remains the key pivot to watch. While below, risks of a further push down to 1871.04 remain. 

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