The latest Federal Reserve meeting minutes from June reveal that while policymakers unanimously agreed to maintain current interest rate levels, internal opinions diverge on the future policy direction. With geopolitical conflicts, tariff pressures, and the AI investment boom intertwining, the inflation outlook has become more complex. Most officials believe inflation risks remain skewed to the upside. Following the release of the minutes, the gold market reaction was relatively muted, with prices continuing to fluctuate within a narrow range.

At the Federal Open Market Committee meeting held in mid-June, all participants supported keeping the federal funds rate target range unchanged. Officials generally observed that recent data suggests upside risks to price stability remain significant, while downside risks to achieving full employment have diminished. Nevertheless, the minutes show that some officials believed there was already justification to raise rates, though they ultimately supported waiting for now. Regarding the current policy stance, there are differing views internally; some believe policy is not restrictive, while a minority view holds that current policy is slightly tight.

Fed staff noted in their economic assessment that inflation remains high and shows an upward trend, partly due to energy and other supply shocks. The labor market remains stable, and real GDP continues to expand robustly. Notably, the Middle East conflict has weighed on overseas economic activity by pushing up energy costs and undermining confidence, particularly in low-income Asian economies and Europe, where local retail energy prices and producer prices have risen sharply, driving up overall overseas inflation. Domestically, the lagged effects of tariffs, potential supply chain disruptions from a possible closure of the Strait of Hormuz, and strong demand driven by AI-related investment are all seen as reasons why inflation may continue to remain well above long-term targets. Price pressures have become broader, with significant price increases seen in multiple sectors including transportation, airfare, petrochemicals, and agricultural inputs.

Regarding the future policy path, officials discussed various economic scenarios. If inflationary pressures gradually subside, maintaining rates unchanged or eventually lowering them could be appropriate; however, if inflation persists due to AI demand, Middle East conflicts, or tariff impacts against a backdrop of a stable labor market, further policy tightening may be necessary. Judging from officials' personal assessments of policy under the most likely economic scenarios, divergence is more evident. Many officials believe year-end rates should be within or slightly below the current target range, but many others believe they should be above the current target range. Most officials emphasized their reluctance to repeat the wording in previous post-meeting statements that hinted future rate decisions might lean dovish. They intend to avoid sending clear rate cut signals to the market; policymakers prefer to retain flexibility.

Following the release of the minutes, spot gold continued to fluctuate within a narrow range of about $10, with the latest quote around $4,068.44 per ounce, showing a slight intraday decline. Market analysis suggests that the minutes show internal discussions revolving around different economic scenarios, with multiple competing views on the policy outlook. Future policy will largely depend on the political situation in the Middle East. The Fed is still weighing broad scenarios and will not commit to a specific policy path until new data provides necessary clarity; the likelihood of a policy adjustment at the next meeting is expected to be low. The signal conveyed by these minutes is not dovish; policy discussion is no longer just about when to cut rates, but the option of raising rates has re-emerged. For the market, the next most critical variables include whether the Middle East situation continues to push up energy prices, whether tariffs and supply chain disruptions make inflation more stubborn, and whether the AI investment boom continues to support demand and push up certain prices. If inflationary pressures gradually subside, the Fed may still maintain rates unchanged or eventually turn to cutting rates, but if inflation remains high while the employment market stays stable, raising rates will become a policy option again. Short-term gold trends will also highly depend on changes in real interest rates, the dollar trend, and geopolitical risk.