HG MARKETS:

Gold prices surged following Federal Reserve Chair Jerome Powell’s pivotal speech at the Jackson Hole symposium, with the precious metal gaining 1% and closing the week up 0.17%. Powell’s remarks strongly hinted at an imminent interest rate cut, potentially as soon as September, leading to a retreat in both the U.S. dollar and Treasury yields. In his address, Powell noted that “the time has come” for the Federal Reserve to reduce interest rates, citing inflation nearing the 2% target. This explicit endorsement of policy easing reverberated through financial markets, with gold emerging as a significant beneficiary.

Traders are now pricing in a 67.5% probability of a 25 basis point cut in September, with a 32.5% chance of a more aggressive 50 basis point reduction. Analysts suggest that expectations of a rate cut could propel gold prices into the $2,550-$2,600 range. The outlook for gold remains positive, though traders should be prepared for potential volatility. A “buy the rumor, sell the fact” scenario could lead to short-term fluctuations, especially if the September rate decision aligns closely with current market expectations.

The broader trend indicates continued support for higher gold prices in the coming months. Factors such as geopolitical tensions, uncertainty surrounding the U.S. presidential elections, and anticipation of an extended rate-cutting cycle are likely to bolster gold’s performance. Traders should closely monitor economic indicators and Fed communications for further clues on the pace and extent of monetary policy easing. While profit-taking is possible, particularly following recent highs, overall sentiment remains bullish for gold as it continues to benefit from its safe-haven status and the prospect of lower interest rates.