How Have Powell’s Hawkish Rhetoric Rattled Key Asset Markets?

Federal Reserve Chair Jerome Powell’s hawkish, measured rhetoric during his June 2025 House testimony sent gold prices tumbling, compounded by easing Middle East tensions. XAU/USD fell 1.52% to $3,315.818, reflecting a weaker US Dollar and fading safe-haven demand. Other assets, including the dollar, silver, Treasuries, and oil, also shifted. This article argues that Powell’s cautious language signals ongoing market volatility, urging investors to closely monitor upcoming economic data.

Powell’s Calculated Hawkishness

Powell’s testimony was marked by deliberate restraint, describing interest rates as “modestly restrictive” and signaling no rush to cut them. He highlighted “uncertainties around trade policies,” particularly tariffs, as a persistent inflation risk, stating the Fed needs “greater confidence” in sustained cooling before easing policy. This careful balance—acknowledging softer inflation data while emphasizing caution—dampened rate-cut hopes, with markets pricing in just 58 basis points of easing by end-2025. His nuanced tone, avoiding firm commitments, underscored a data-driven approach, keeping markets on edge. For gold, which thrives in low-rate environments, this spelled immediate pressure, pushing prices toward the 50-day moving average at $3,317, with support at $3,300 and $3,295, and risks of a drop to $3,245 if bearish momentum persists.

Impact on Other Assets

Powell’s words rippled across markets. The US Dollar Index (DXY) dropped 0.53% to 97.826, but his hawkish stance suggests potential support if reinforced. Silver (XAG/USD) fell 0.79% to $35.8255, mirroring gold’s safe-haven retreat. US 10-Year Treasury yields slid 1.13% to 4.293%, reflecting mixed inflation expectations tied to Powell’s tariff concerns. Oil prices stabilized as a Middle East ceasefire reduced geopolitical risk, while US equity indices like the S&P 500 rose over 1%, fueled by risk-on sentiment. These shifts highlight how Powell’s language, alongside geopolitical developments, reshapes asset dynamics.

Economic Signals and What’s Next

US Consumer Confidence fell to 93.0 in June, below the expected 100, signaling economic unease that could support safe-haven assets long-term. China’s central bank liquidity injection may bolster commodities like gold and oil. Upcoming data—Durable Goods Orders, GDP, Initial Jobless Claims—and Powell’s Senate testimony on June 25, 2025, will be pivotal. Markets will watch whether Powell maintains his cautious tone or offers new signals.

Looking Ahead

Powell’s measured rhetoric keeps gold’s short-term outlook bearish, needing a break above $3,400 to target $3,450 or $3,500. The dollar and Treasuries remain tethered to Fed signals, while oil and equities may gain from risk appetite. As Powell’s words fuel uncertainty, staying nimble and informed is crucial in this volatile market.