Gold futures reached a new all-time high closing price of USD$2,533.60 after Federal Reserve Chairman Jerome Powell closed his speech at the Economic Symposium in Jackson Hole, Wyoming.
Given on Friday, the speech detailed a shift in monetary policy and has sent shockwaves through many financial sectors, including U.S. equities and precious metals.
Chairman Powell declared that “the time has come for policy to adjust,” signalling a significant shift in the Federal Reserve’s approach. He noted that inflation has contracted closer to the Fed’s 2 per cent target and expressed concern about the well-being of the labour market.
Powell emphasized that current labour market conditions are less tight than they were in 2019. Inflation ran below 2 per cent that year. He also said the labour market seems unlikely to be a source of elevated inflationary pressures in the near future.
The financial world interpreted Powell’s remarks as a clear signal that the Federal Reserve is prepared to begin a series of interest rate cuts. Powell did not mention a specific timeline.
Gold futures continued to rise in response to these developments. The most active December contract reached an intraday high of $2,561.20. By late afternoon, it had settled at $2,553.60, marking a modest gain of $4.90.
Speech by Chair Powell on the economic outlook at an economic policy symposium sponsored by @KansasCityFed: https://t.co/oBbmwVLBAz
Watch live: https://t.co/xOEbfu9h6K pic.twitter.com/WxwdMOn7jJ
— Federal Reserve (@federalreserve) August 23, 2024
Read more: Calibre Mining’s latest results may extend life of mine at Eastern Borosi
Read more: Calibre Mining’s latest finances show fifth straight year of growth
FED officials unconcerned about recession or job losses
Powell mentioned labour conditions 27 times. This represents a shift in focus for the FOMC, which has been fixated on inflation over the past two years. In contrast, Powell referenced the labour market only about 19 times in last year’s Jackson Hole address.
The Federal Reserve chairman’s speech suggested that Fed officials are not seriously concerned about an imminent recession or a wave of job losses in spite of this week’s data revisions showing weaker job growth at the start of the year than initially reported.
Such concerns could justify rapidly lowering borrowing costs.
Follow Joseph Morton on Twitter
joseph@mugglehead.com
