InfoQuest – Gold futures in New York closed up more than 1% on Friday (August 23) as the dollar and bond yields fell after comments from Federal Reserve Chairman Jerome Powell that the Fed will cut interest rates in September.
The Comex gold contract for December delivery rose 29.60, or 1.18%, to close at $2,546.30 an ounce.
Silver for December delivery rose 78.5 cents, or 2.66%, to close at $30.256 an ounce.
Platinum for October delivery rose $12.40, or 1.30%, to close at $966.10 an ounce.
Palladium for December delivery rose $22.00, or 2.39%, to close at $942.50 an ounce.
“It's time for the Fed to cut rates,” Powell said at a conference in Jackson Hole, Wyoming, on Friday. “Inflation is approaching the Fed's 2% target, which is a clear sign that the Fed will cut rates soon.”
The dollar index fell 0.8%, while the yield on the 10-year U.S. Treasury note fell after Powell’s speech. A weaker dollar makes gold cheaper and more attractive to holders of other currencies.
Moreover, lower interest rates often increase the attractiveness of gold, which has no interest rate yield.
Traders expect a 59.5% chance that the Fed will cut rates by 0.25% in September, while there is a 40.5% chance that it will cut rates by 0.50%.
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