Gold prices climbed as Federal Reserve Chair Jerome Powell hinted at a possible rate cut in September, citing rising downside risks to the labor market.
At the time of writing, XAU/USD is trading above $3,350, up 0.40%, surpassing initial resistance levels.
Powell balances inflation and employment risks
In his speech, Powell noted that “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
He highlighted that labor market risks are increasing but remain balanced, allowing the Fed to proceed cautiously.
Powell also stated that inflation risks are tilted upward, while employment risks point downward, describing it as a “challenging situation.”
He echoed Cleveland Fed President Beth Hammack’s recent comments that tariffs could produce a temporary inflation spike, though its effects would take time to materialize.
Gold price reaction
Gold has surged past $3,350 but remains below last week’s high of $3,374.
If XAU/USD breaks that level, it could test $3,400, then the June 16 high of $3,452, and potentially the record high of $3,500.
On the downside, $3,300 is seen as the first key support zone.
