Gold price rises noticeably after Powell speech – Commerzbank

The price of Gold jumped by around $50 to just under $3,380 per troy ounce on Friday afternoon, Commerzbank's commodity analyst Carsten Fritsch notes.

Gold might not overpass the $3,400 mark

"This was triggered by Fed Chairman Powell's speech at the annual Fed symposium in Jackson Hole. In his speech, he paved the way for an interest rate cut in September by stating that the impact of tariffs on inflation was temporary and pointing to downside risks for employment. He also added that, with monetary policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting the policy stance."

"The market subsequently priced in a rate cut in September almost in full in Fed Funds Futures. Before Powell's speech, doubts about a rate cut in September had grown. In addition, stronger rate cuts were also priced in for the following months. The US dollar came under pressure as a result of increased rate cut expectations, which benefited Gold as did the marked decline in bond yields. A look at the Gold price in euros shows that the rise in Gold prices was mainly driven by the weaker US dollar."

"Although the price in euros also rose, it was nowhere near as strong as the price in US dollars. Following the adjustment of interest rate expectations, the Gold price is unlikely to rise further for the time being. This was already evident yesterday, when the price fell back slightly. The price is therefore not expected to exceed the $3,400 mark for now. New impetus is needed for this to happen. One such impetus could be the ousting of a Fed governor by US President Trump, as this would undermine the independence of the US central bank."