Gold Stuck Near 8-week Lows After Fed Minutes

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The details of the meeting, at which the US central bank voted to raise interest rates, also showed that several officials wanted to announce a start to the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities by the end of August but others wanted to wait until later in the year. The minutes show a Fed divided between officials comfortable with the unemployment rate undershooting their estimates about the sustainable level and those who fret that "a substantial and sustained unemployment undershooting" could trigger inflation or financial instability. They think the Fed will skip a rate hike that meeting.

The Fed's forecast for consumer price inflation was revised down slightly for 2017 but the projection was little changed thereafter, as the recent weakness in inflation was viewed as transitory.

Members of the Federal Open Market Committee - the Fed's rate-setting panel - "generally reiterated" their support for continuing to gradually raise rates, according to the minutes.

The slow start to the year has led some economists to caution against additional interest rate hikes this year.

"The information reviewed for the June 13-14 meeting showed that labor market conditions continued to strengthen in recent months and suggested that real gross domestic product (GDP) was expanding at a faster pace in the second quarter than in the first quarter", the minutes read.

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The strengthening job market left a lot of them comfortable with raising a key short-term rate last month.

After that meeting, the Fed announced it planned to start reducing the balance sheet sometime this year but provided no timetable.

The Fed had signaled earlier this year that it planned to end the policy of reinvesting the proceeds from maturing debt in yet more bonds, which could have a similar effect to increasing interest rates.

Investors also see the next rate increase occurring in December, according to Fed funds futures data compiled by the CME Group. "A few participants expressed concern that subdued market volatility, coupled with a low equity premium, could lead to a buildup of risks to financial stability". But at some point, increases to the Fed's benchmark interest rate and reductions to its balance sheet will begin to affect bond markets and raise the price of loans for everyday Americans, he said.

The issue of when to begin reducing the Fed's $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities and how it might affect deciding future rate rises also sparked debate. But Ms. Yellen downplayed the extent of the Fed's concerns at a news conference after the Fed's June meeting.

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