Gold prices jumped Wednesday afternoon on remarks from Federal Reserve Chairman Jerome Powell that a cut in the benchmark interest rate could be ‘on the table’ by September if current economic conditions hold steady.
The yellow metal – already on pace to notch its best monthly performance since March before Wednesday’s Federal Open Market Committee meeting – was up $24.71 in afternoon trading at $2,434 per ounce. Silver also benefited, edging up $0.47 at $28.81 per ounce.
Powell floated his dovish scenario on possibly cutting rates after federal policymakers unanimously decided to leave the benchmark rate unchanged at 5.25%-5.5%.
In a post-meeting press conference, Powell said economic activity continues to expand at a solid pace; unemployment remains low – although it has recently ticked up – and inflation has eased over the past year, signaling some progress toward the Fed’s 2% target. But he continued to express the need for better confidence that inflation is moving sustainability downward.
However, if future data demonstrating progress in the labor market and economic growth remain steady, “a rate cut could be on the table at the September meeting,” Powell told reporters.
“We’re getting closer to the point of where we want to dial back the restriction, but we’re not at that point yet,” Powell said. “We just want to see more data and gain confidence, and more good data would cause us to gain more confidence.”
Gold was already climbing throughout the day before the FOMC announced its decision on interest rates, buoyed by a slide in both the dollar and Treasury yields, as well as fears that the conflict in the Middle East could expand into Iran after reports that Hamas leader Ismail Haniyeh was killed in a predawn air strike on Tehran.