Gold Prices Remain Down: Largely Ignore Optimistic Comments From Fed's Powell

(September 30, 2024 - Neils Christensen)

(Kitco News) -  The gold market remains under pressure but is not experiencing any steep selling as Federal Reserve Chair Jerome Powell signals a moderate pace in the Federal Reserve’s easing cycle.

Powell struck a relatively positive tone, noting that “the economy is in solid shape.” He provided little forward guidance on monetary policy.

“Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance. But we are not on any preset course. The risks are two-sided, and we will continue to make our decisions meeting by meeting. As we consider additional policy adjustments, we will carefully assess incoming data, the evolving outlook, and the balance of risks,” Powell said in his prepared remarks.

These are the first comments Powell has made since the U.S. central bank cut rates by 50 basis points. Powell was speaking at the National Association for Business Economics Annual Meeting in Nashville, Tenn.

“Our decision to reduce our policy rate by 50 basis points reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate economic growth and inflation moving sustainably down to 2 percent,” he said.

While gold didn’t see much reaction to Powell’s prepared remarks, it started to sell off during his fireside chat with Ellen Zentner, NABE President; Chief Economic Strategist and Global Head of Thematic & Macro Investing, Morgan Stanley Wealth Management.

During the discussion, Powell reiterated his optimistic view that the Fed will be able to take its time as it eases monetary policy.

“If the economy slows more than we expect, then we can cut faster. If it slows less than we expect, we can cut slower, and that's really what's going to decide it. But I think from a base case standpoint, we're looking at it as a process that will play out over some time, not something that we need to go fast on,” Powell said.