Gold Prices Remain High as Fed Concerns About Inflation Grow

Gold prices have remained high after the release of the minutes from the US Federal Open Market Committee's (FOMC) meeting on July 28-29. The content of the minutes reveals that policymakers at the Fed are increasingly concerned about inflation, exceeding expectations.

The developments in the financial market between the two meetings were significantly affected by the conflict in the Middle East, leading to increased oil prices and bond yields. However, short-term inflation expectations only rose slightly after oil prices surged. Investors still assess the Fed's determination to bring inflation back to 2%.

Long-term inflation expectations remain stable and consistent with the Fed's long-term target. Nevertheless, real inflation continues to be high, with some FOMC members believing that price increases in the past year have been widespread, affecting goods and services.

The minutes show that most members predict inflation will decrease in the rest of 2026 as the impact of tariffs and previous energy price increases weakens. However, many warn that inflation may be more persistent than expected. Fed staff forecast inflation to continue cooling down in 2027, before falling to around 2% in 2028.

The possibility of continued policy tightening is a key concern for investors. Many members believe the Fed may need to continue to tighten monetary policy if inflation does not decrease. Some even think that current financial conditions are not restrictive enough to ensure inflation returns to the 2% target.