Federal policymakers want more underlying economic data "to be more confident" that inflation is truly cooling before cutting interest rates, Federal Reserve Chairman Jerome Powell said Tuesday.
Powell, who spoke at a European Central Bank monetary policy conference in Portugal, said while the U.S. has logged "quite a bit of progress" in bringing inflation back down to the 2% target, he offered neither a timeline for when the Fed will be assured of its downward slide nor when rate cuts would be appropriate.
"We just want to understand that the levels that we're seeing are a true reading on what is actually happening with underlying inflation," Powell said at a roundtable discussion with ECB President Christine Lagarde and Brazil Central Bank Governor Roberto Campos Neto. "We want to be more confident, and frankly, because the U.S. economy is strong ... we have the ability to take our time."
Ahead of Powell's remarks, gold was already on a slide in Tuesday morning trading, with the yellow metal still pressured by higher U.S. Treasury yields and a stronger dollar. The precious metal was down $7.04 at $2,325 per ounce. Silver, meanwhile, was breaking positive territory, holding onto a $0.14 gain at $29.63 per ounce.
Powell's wait-and-see message did little to assure cautious investors that the U.S. central bank would be ready to cut 23-year-high interest rates by September as many had hoped. His appearance was one of several critical events bullion traders were closely watching this week. On Wednesday, the minutes from June's Federal Open Market Committee will be released, followed by Friday's data on U.S. non-farm payrolls.
Until Wall Street gets a fuller picture by the end of the week, gold appears to still be searching for a market catalyst to propel it out of sideways trading.