Fed Minutes See Progress, Boost Stocks

NEW YORK (TheStreet) -- Minutes from the Federal Reserve Open Market Committee's early November meeting injected some life into stocks Tuesday afternoon as major U.S. indices pared their losses in response to Fed officials' confidence in the progress of economic recovery.

Despite the FOMC's faith in the solidity of improving economic indicators, high unemployment levels and low interest rates were a point of concern for members. Some expressed fears that low interest rates would encourage risk-taking in financial markets as investors used a weaker U.S. dollar to push commodity prices higher and increase inflation worries. Nevertheless, FOMC officials agreed that economic conditions were "likely to warrant exceptionally low rates for an extended period."

The release of the minutes for the two-day meeting that ended Nov. 4 pressured the U.S. dollar late in Tuesday's trading session, as the recap revealed that members anticipate unemployment levels to remain high, thereby necessitating that rates be kept low. According to the minutes, the officials don't expect the jobless rate to drop to 8.6% until 2011.

Jim "Rev Shark" DePorre wrote on RealMoney.com that some of the most intriguing aspects of the Fed minutes included the belief that the fall in the dollar was orderly, in addition to the raised forecast for gross domestic product estimates in 2009 -- while estimates remained unchanged for 2010 and 2011.

The weak dollar has pushed gold prices to new highs with spot gold prices hitting a record $1,165.50 an ounce on Monday. The December gold contract settled ahead by $1.10 to $1,165.80 an ounce on Tuesday.

-- Written by Melinda Peer in New York.

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