Gold Jumps Near $3380 as Powell Signals September Rate Cut
Friday, 8/22/2025 16:05
GOLD PRICES surged more than 1% on Friday as Federal Reserve Chair Jerome Powell indicated a rate cut next month in what was almost certainly his last keynote address at the Jackson Hole economic conference,
writes Atsuko Whitehouse at BullionVault.
Powell said “shifting” economic risks have sharpened the case for a Federal Reserve rate cut, warning that the labour market was cooling and Donald Trump’s tariffs were lifting inflation.
“Powell shows a
whole lot more dovish
signalling than investors expected,” said Nicky Shiels, head of metals strategy at Swiss refining and finance group MKS Pamp.
The Dollar Index – a measure of the US currency's value versus its major peers – fell 0.8% to a 5-session low immediately after the speech, while ten-year US Treasury yields – a benchmark rate for government as well as many finance and commercial borrowing costs – fell 5 basis points to a one-week low.
The major US stock indexes rose over 1%, with the S&P 500 gaining 1.3% and halting a five-day slide, while the Nasdaq Composite and Dow Jones Industrial Average each surged as much as 1.6%.
Spot gold jumped as much as 1.2% to a one-week high of $3377 per ounce, breaking its narrow range between the 50- and 100-day moving averages at $3346 and $3316.
The odds of a September rate cut by the Federal Reserve’s rate-setting Federal Open Market Committee (FOMC) – seen as a 75% certainty in the prior session – have now risen to more than 90%, according to
betting on interest-rate futures.
“The stability of the unemployment rate and other labour market measures allows us to proceed carefully as we consider changes to our policy stance,” Powell said in remarks prepared for the Fed’s annual conference on Friday.
“Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
According to a report from the US Department of Labour (DOL) released on Thursday, the number of Americans filing new applications for jobless benefits rose by the most in about three months last week, while the number of people collecting unemployment relief in the prior week climbed to the highest level in nearly four years.
That followed
the shock weakness in July’s US jobs data, which angered President Donald Trump, who fired the Commissioner of Labor Statistics and again called for the resignation of “stubborn moron” Powell.
Fed Bank of Kansas City President Jeff Schmid – a voting member of the FOMC in 2025 – said on Thursday that he thinks inflation risks are marginally higher than risks to the labour market, though monetary policy is in a good place as policymakers consider an interest-rate adjustment next month.
“As you get closer to the optimum dual mandate numbers – maximum employment and stable prices – it actually becomes more difficult to make decisions on the margins relative to where that policy rate should go,” Schmid said.
The FOMC minutes for July – when members held the policy rate for the fifth straight meeting – were published on Wednesday and showed that most Fed officials highlighted inflation risks as outweighing concerns over the labour market.
The Fed’s preferred inflation data will be published next Friday and US payroll data the following Friday, ahead of the FOMC meeting scheduled for 16th and 17th September.
The core PCE deflator, the Fed’s preferred measure of inflation, is due next week and is expected to rise to a five-month high of 2.9% in July from 2.7% in June. The index had fallen to a four-year low of 2.6% in April but has been rising since.
Federal Reserve Bank of Cleveland chief Beth Hammack – a non-voting FOMC member this year – said in the last session she wouldn’t support easing if officials had to decide tomorrow.
“We have inflation that’s too high and has been trending upwards over the past year,” Hammack said.
The S&P Global flash August factory purchasing managers index, published on Thursday, indicated US manufacturing is expanding at the fastest rate in more than three years on stronger demand that is also fuelling sustained inflationary pressure.
The US Producer Price Index (PPI) for July rose at the fastest pace in three years, while the Consumer Price Index (CPI) remained unchanged for the month, according to data published last week.
Trump on Friday said he would fire Federal Reserve Governor Lisa Cook – a voting member appointed by President Joe Biden in 2022 – if she does not resign her post over mortgage-fraud accusations made this week by Bill Pulte, one of Trump’s allies and head of the Federal Housing Finance Agency.
Cook said on Thursday she had "no intention of being bullied to step down" from her position at the central bank and was “gathering the accurate information to answer any legitimate questions and provide the facts.”
"Donald Trump is making up blatant lies in an effort to oust the first Black woman to serve on the Federal Reserve Board, so he can replace her with another unqualified loyalist who will do his bidding," said Democrats on the US House of Representatives Committee on Financial Services.
Former Vice President Mike Pence, who served during Trump’s first term, said on Thursday that he hoped the allegations against Cook were not part of an “
overall pressure campaign” to persuade the central bank to cut rates.
Gold priced in UK Pounds
and Euros meanwhile rose 0.4% and 0.3% Friday to 1-week highs above £2495 and €2881 per ounce, respectively.
Prices for silver – primarily an industrial metal, with nearly 60% of its annual demand coming from industrial uses – surged 3.7% to a one-month high of $38.94 per ounce.
The strength of silver pushed the
Gold/Silver Ratio
– which tracks the two formerly monetary metals’ relative prices – down to under 87, the lowest value for gold versus silver in four weeks.
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