Gold and silver were both trading down late Tuesday morning as Federal Reserve Chairman Jerome Powell warned U.S. senators against moving too quickly to cut interest rates for fear of jeopardizing progress being made to bring down inflation.
Powell was testifying before the U.S. Senate Committee on Banking, Housing, and Urban Affairs – the first of a two-day appearance on Capitol Hill to present the Fed’s semiannual Monetary Policy Report. Powell will appear before Congress on Wednesday.
After both precious metals began trading in positive territory, prices began sliding just ahead of Powell’s testimony. Gold was down $2.31 late Tuesday morning at $2,359 per ounce, while silver dipped $0.09 at $30.76 per ounce.
Investors were closely watching Powell’s appearance this week in search of clues that would support an interest rate cut as early as September.
After delivering prepared opening remarks noting “considerable progress” toward bringing inflation down to the Fed’s 2% target and labor market conditions that have “cooled while remaining strong,” Powell told committee members that “the risks to achieving our employment and inflation goals are coming into better balance.”
Powell’s cautionary words on the timing of interest rate adjustments came during questions from lawmakers, who pressed the monetary chief on why interest rate cuts weren’t on a faster track, given the current challenges the economy is weathering.
“If we loosen policy too late or too little, we could hurt economic activity,” Powell told the senators. “If we loosen policy too much or too soon, then we can undermine the progress on inflation, so we’re very much balancing those two risks.”
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