GOLD TALKING POINTS

The recent rally in the price of gold appears to be stalling ahead of the 200-Day SMA ($1847) as Federal Reserve officials expect the recent spike in the US Consumer Price Index (CPI) to be temporary, and the Federal Open Market Committee (FOMC) Minutes may drag on the precious metal as the central bank appears to be in no rush to switch gears.

Fundamental Forecast for Gold: Neutral

The price of gold holds near the monthly high ($1845) amid the recovery in longer-dated US Treasury yields, and it remains to be seen if the FOMC Minutes will influence the near-term outlook for bullion as Fed Governor Christopher Waller insists that “the trend for the economy is excellent” while speaking at the Global Interdependence Center's 39th Annual Monetary and Trade Conference.

The Fed Minutes may mirror the recent remarks from Governor Waller as the permanent voting-member on the FOMC argues that “the factors putting upward pressure on inflation are temporary,” and it seems as though the central bank is in no rush to scale back its emergency measures as Waller emphasizes that “we need to see inflation overshoot our target for some time before we will react.”

Governor Waller goes onto say that “we need to see more data confirming the economy has made substantial further progress before we adjust our policy stance,” and the comments suggests the Fed will retain the current course for monetary policy as the central bank braces for a transitory rise in inflation.

With that said, the FOMC Minutes may drag on longer-dated US Treasury yields as the central bank stays on track to “increase our holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month,” and the dovish forward guidance for monetary policy may undermine the recent rally in the price of gold as the advance from the March low ($1677) appears to be stalling ahead of the 200-Day SMA ($1847).