Mixed feelings from the FOMC minutes and gold is under pressure

FOMC meeting minutes released

Yesterday’s FOMC meeting minutes showed that, behind the Federal Reserve's widely expected decision to hold interest rates steady in June, was a spirited internal debate, as the published meeting minutes laid bare a policy committee wrestling with competing risks and divergent outlooks. On one side, a contingent of officials warned that the battle against inflation was far from over, citing persistent upside pressures and noting that a handful of their colleagues even saw a credible argument for resuming rate increases, especially given the unpredictable interplay of AI investment booms, geopolitical flare-ups in the Middle East, and the lingering distortions of trade tariffs, any of which could keep price growth uncomfortably hot even as the job market held firm. In such eventualities, nearly all who entertained these possibilities agreed that further firming would be unavoidable to drag inflation back to the 2% target. Yet, for all that hawkish contingency planning, the more optimistic, or at least more patient, majority anchored their baseline expectations on a softer landing, projecting that rates would likely finish the year right around their current 3.50%–3.75% level. That prevailing view ultimately carried the day, leaving the policy rate untouched and the door open for whatever economic reality might deliver next.

The technical picture of USDCAD on our daily chart shows that, after a strong rally between the beginning of May and the end of June, the pair is now in a slight correction mode lower. That said, the pair remains above a short-term tentative upside support line, drawn from the lowest point of May. If the rate continues to trade above that trendline, we will remain positive with the near-term outlook, however, to get a bit more comfortable in examining higher areas, we prefer to wait for a break above the 1.4260 barrier first, which marks the lowest point of January 2025. This break might open the path towards higher areas, where the next potential resistance target could be near the 1.4415 level. That level marks the highest point of April 2025.

Alternatively, a break of the aforementioned upside line could signal a change in the direction of the current trend, possibly opening the door for further declines. That’s when we may target the next potential support area between the 1.4015 and 1.4024 levels, marked by the highs of 2^nd of December and the 11^th of June.

(KOSPI index daily chart. Source: tradingview.com)

Gold is feeling the heat

Gold pierced the $4,100-per-ounce threshold late Wednesday, as the precious metal remained trapped under a cloud of geopolitical anxiety tied to escalating Middle Eastern hostilities and their potential to reignite inflationary pressures. The U.S. military confirmed a second consecutive day of strikes against Iranian targets, aimed at degrading Tehran's capacity to disrupt shipping through the strategic Strait of Hormuz, while retaliatory Iranian attacks against American regional bases underscored the widening confrontation. President Trump declared the ceasefire effectively dead, threatening additional military action and a renewed naval blockade, further raising the stakes. On the monetary policy front, the June FOMC minutes revealed that the broader committee voiced deepening unease over inflation risks. The derivatives markets have held firm in pricing at least one quarter-point rate increase from the Fed before year-end, a factor that continues to cap gold's upside despite its safe-haven allure.

Gold is currently trading below a medium-term downside resistance line taken from the current all-time and above a key support area, at 3959, marked roughly near the 24^th of June. Although the medium-term trend remains to the downside, we prefer to wat for a break below that support area first, before examining lower potential areas. If that happens, this will confirm a forthcoming lower low, potentially clearing the path to the 3886 obstacle, or even the 3627 zone, marked by the low of 18^th September 2025.

Alternatively, a break of the previously discussed downside line could shift the tides towards higher levels, as such a break might signal a directional change of the current trend. We may then target our next possible resistance hurdles, at 4306 and 4382, which mark the inside swing low of 16^th June and the high of 17^th June respectively.

(Gold daily chart. Source: tradingview.com)