NEW YORK: Gold prices rebounded on Friday, buoyed by heightened expectations of a September rate cut following comments from Federal Reserve Chair Jerome Powell at the central bank’s Jackson Hole symposium.
Spot gold was up 0.7% at $3,362.53 per ounce by 10:26 a.m. EDT (1426 GMT), while US gold futures were 0.8% lower at $3,408.20. The US dollar was down 0.7%, making gold less expensive for other currency holders. Powell said that the shifting balance of risks may warrant adjusting the Fed’s policy stance, but stopped short of committing to a rate cut. His remarks struck a delicate balance, acknowledging growing risks to the job market, while cautioning that inflationary pressures remain.
“In his eighth and final Jackson Hole speech, Powell surprised a worried market, opening the express lanes to a September rate cut, which has boosted every single asset, including gold,” said Tai Wong, an independent metals trader.
“It will be important to see if gold can break and hold above $3,400 in the coming days,” he added. Traders now see a 90% chance of a 25 basis-point rate cut in September, up from 75% before the speech, CME’s FedWatch tool showed. Powell’s remarks put significant emphasis on upcoming jobs and inflation data that will be published before the Fed’s September 16-17 policy meeting.
Gold typically performs well in a low interest rate environment, as it does not offer any yield and becomes more attractive relative to interest-bearing assets.
Physical gold demand in key Asian hubs remained subdued this week as price volatility kept buyers at bay, while jewellers in India resumed purchases ahead of a key festival season.
Spot silver gained 1.3% to $38.67 per ounce, platinum rose 0.5% to $1,359.75, and palladium firmed 1.4% $1,126.25.
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