Gold prices jump 1.3%, near all-time high as Fed chief signals rate cut ahead

Gold prices climbed in the international market on Friday, August 23, after US Federal Reserve Chair Jerome Powell made clear indications towards an upcoming reduction in the benchmark lending rates, while addressing the Jackson Hole Economic Symposium.

"The time has come for policy to adjust," Powell said. "The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," he was further quoted as saying.

Following his remarks, spot gold prices moved upwards, reaching an intraday high of $2,518.36 an ounce. This was up 1.3% as against the last closing price.

At end of the trading session, the prices settled at $2,512.41 per ounce, up 1.1%. The rate is close to gold's all-time high of $2,531.7 an ounce clocked earlier this month.

The US gold futures also surged, with the contracts for December delivery settling 1.27% higher at $2,548.7 per ounce at the Commodity Exchange Center (COMEX).

Before Powell delivered his address at the Jackson Hole Economic Symposium, the gold futures on India's Multi Commodity Exchange (MCX) ended flat at ₹72,205 per 10 gram.

Notably, the prospects of lower interest rates leads to increased demand for gold, as the metal is seen as a hedge against inflation.

Meanwhile, Powell's remarks also led to a jump in the benchmark US stock market indices. The tech-heavy Nasdaq Composite closed 1.4% higher at 17,877.79. The broader S&P 500 advanced 1.15% to settle at 5,634.61, which is close to its all-time high. The Dow Jones Industrial Average jumped 462.30 points, or 1.14%, to end at 41,175.08.

The Wall Street has remained in anticipation of an easing in the monetary policy. The benchmark lending rates are currently in the range of 5.25%-5.5%, the highest in the last 23 years. The Fed has kept them unchanged since July 2023.