WASHINGTON (dpa-AFX) - Gold prices jumped on Friday after the crucial keynote speech by Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium today wherein he hinted at possible rate cuts in September.
Earlier losses due to uncertainty on the Fed's stance were covered later after the Fed Chair's speech rejuvenated the market.
Front Month Comex Gold for August delivery shot up by $37.50 (or 1.12%) to $3,374.40 per troy ounce today. Gold gained $38.40 (or 1.15%) per troy ounce for the week.
Front Month Comex Silver for August delivery surged by 97.60 cents (or 2.57%) to $39.003 per troy ounce today. Silver gained $1.1090 (or 2.93%) per troy ounce for the week.
Earlier in the session, expectations from traders for a Fed rate cut in September were muted as the minutes of the July meeting released on Wednesday revealed two board members were isolated in their call for monetary easing.
Later in the day at the Jackson Hole Symposium, Powell hinted at possible rate cuts in the offing.
Pointing to the growing risk to the job market (after a disappointing July labor report as well as strong downward revisions in hiring numbers in previous two months) and elevated inflationary risk, Powell affirmed that it requires a balanced reaction from the central bank. He also suggested that while unemployment remains low, risks to the labor market are rising and policy remains 'restrictive,' and hence adjustments 'may be warranted.'
The 10-year Treasury yield was at 4.271%, down from 4.311% before the speech. The two-year yield was at 3.797%, down from 3.783%.
While treasury yields moved lower, markets swiftly reacted to the Powell's speech with CME Group's FedWatch Tool indicating that investors are betting on a 91% chance of a 25 basis point rate cut.
Currently, the benchmark borrowing rates are in the range of 4.25% to 4.5%.
When interest rates are higher for a longer time, it adds pressure on non-yielding gold as they increase the buying and opportunity costs.
Of note, US President Donald Trump has been explicitly stating his wish to have a low-interest regime and intensified public pressure on the Fed to slash interests.
On the geopolitical front, after spearheading efforts to end the Russia-Ukraine war, Trump seemingly took a dissociated stand after stating that he intends to first facilitate a meeting between the presidents of Russia and Ukraine. He added that he may involve himself later only when the need arises.
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