Gold Surges Above $3,370 as Powell Signals Dovish Shift, Markets Eye September Rate Cut

Gold prices rallied on Friday, climbing above $3,370 after Federal Reserve Chair Jerome Powell struck a more dovish tone at Jackson Hole. Powell warned that risks to the labor market are mounting, even as inflation pressures remain tilted to the upside—an acknowledgment of the Fed’s increasingly delicate balancing act.

The yellow metal (XAU/USD) touched a daily high of $3,378 before easing slightly to $3,371, well above its session low of $3,321. The move came as traders priced in a 90% probability of a 25-basis-point rate cut by the Fed in September. Still, the decision is not set in stone, with two inflation readings and the pivotal Nonfarm Payrolls report on September 5 standing between now and the next policy call.

Powell’s remarks sent ripple effects across financial markets. US Treasury yields tumbled, with the 10-year note down nearly seven basis points at 4.26%. Real yields also slipped, while the US Dollar Index (DXY) dropped more than 1% to 97.55, deepening pressure on the greenback.

Cleveland Fed President Beth Hammack reinforced Powell’s cautious stance, suggesting the central bank is nearing a neutral rate but must remain vigilant as both unemployment and inflation risks linger.

Looking ahead, investors will closely watch a packed US economic calendar featuring Durable Goods Orders, GDP figures, Consumer Confidence, Jobless Claims, and the Fed’s preferred inflation measure—the Core PCE Price Index. Each release could sway expectations for the September policy meeting.