Increase in Gold Prices Following Powell's Enhanced Rate Cut Suggestions During Jackson Hole Speech

The Federal Reserve is considering a series of interest rate cuts in response to economic challenges, as indicated by Chair Jerome Powell during his speech at the Jackson Hole Economic Policy Symposium.

Powell's remarks are in line with analysts' expectations of a 25 basis point cut to the benchmark rate in September. According to Blerina Uruci, chief economist with T. Rowe Price, the Fed could make a more dovish 50 basis point cut if August payroll growth slows below 50,000 per month and unemployment increases.

The shifting balance of risks, including higher tariffs, tighter immigration, and a slowdown in the pace of growth in the labor market, may warrant adjusting the Fed's policy stance, Powell said. Inflation has eased from post-pandemic highs, but remains elevated, he added.

The labor market remains close to maximum employment, according to Powell, but the biggest challenge for the Fed is maintaining its dual mandate of ensuring too much slack doesn't enter the labor market while also attempting to ease inflation to the target 2 percent.

This is not the first time the Fed has faced dissent over its interest rate decisions. In July 2025, there was dissent from two committee members, the first time more than one member has voted against the committee since December 1993. Michelle Bowman, who was appointed by former President Trump, was one of the two dissenters supporting a rate reduction.

The Nasdaq 100 rose 1.48 percent to 23,485 points, while the Dow Jones Industrial Average surged 2 percent to trade in record territory at 45,687 points. The S&P 500 climbed 1.49 percent to 6,465 points.

Silver rose more than 2 percent to US$38.94 per ounce, but the gold price remained steady following Powell's remarks, trading at US$3,370 per ounce.

Over the longer run, changes in tax, spending, and regulatory policies may have important implications for economic growth and productivity, according to Powell. However, the impact of tariffs on the economy still remains uncertain.

In September 2024, the Fed made a 50 basis point cut, marking a significant adjustment in its monetary policy. As the economy continues to evolve, the Fed will likely need to navigate these challenges carefully to ensure a balanced approach to its dual mandate.