The word from Jerome Powell, the president of the US central bank (Fed), is golden. Literally. The ounce of the precious metal rose further in the run-up to the conference in Jackson Hole (Wyoming), in the United States, which opened on Thursday, August 22. During this meeting, described as a high fair for central bankers, the great financial oracle was to speak. To say that Mr. Powell’s statements were expected is an understatement.
Already on Monday, August 19, the ounce of 31 grams had crossed the symbolic mark of 2,500 dollars (or 2,230 euros). Historic record broken. Not long. The next day, it closed at $2,514 after crossing $2,530 during the session. Since then, the fever has subsided a little.
But on Friday, August 23, the day of Mr. Powell’s speech, gold rebounded to over $2,500 per ounce. ounces. Compared to the price at the beginning of January, it shows an increase of more than 20%.
Irresistible rise
Indeed, the precious metal has been in turmoil since late 2023. And since then it has taken an irresistible climb, flying from plate to plate. This rise is regularly driven by Mr Powell’s comments, but also, and perhaps above all, by investors’ expectations of his future positions. With a single nagging topic, of course the interest rate drop, but divided into a large number of possible conjectures about the timetable and pace of the drop.
“The time has come for a policy adjustment” monetary policy, Mr. Powell finally declared. He thus opened the way for a possible first interest rate cut at the institution’s next meeting, which is scheduled for 17 and 18 September. This prospect causes the dollar to fall and drives gold to the firmament. Especially since a lower price of money favors the yellow metal, which does not pay interest. “The Combination of a Dollar and Lower Treasury Rates”assets that traditionally compete with gold continue to support the price, Saxobank analyst Ole Hansen told Agence France-Presse.
The confirmation of a likely materialization of the September forecasts also confirmed its upward trajectory on Friday. Without forgetting that the latest data on US employment, which proves that the growth in the demand for labor is less strong than expected, provides arguments for this change in the interest rate trend. The markets are now speculating on the extent of the decline. They expect a drop that will reach one point at the end of the year, with a first phase marked by a drop of a quarter of a point in the autumn.
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