Global gold prices closed the week sharply higher on Friday, August 22, fueled by growing expectations that the U.S. Federal Reserve (Fed) could cut interest rates in September 2025 following remarks from Fed Chair Jerome Powell at the annual Jackson Hole symposium.
At the close, spot gold rose 1.1% to $3,373.89 per ounce, while gold futures gained 1.1% to $3,418.50 per ounce. Meanwhile, the U.S. Dollar Index fell 1%, making gold more affordable for holders of other currencies.
In his speech, Powell acknowledged that the “balance of risks is shifting,” suggesting the Fed may adjust its policy stance, though he refrained from committing to a rate cut. He emphasized two key challenges: rising risks to the labor market and persistent inflationary pressures.
According to independent metals trader Tai Wong:
“Powell’s final speech at Jackson Hole reassured a nervous market, paving the way for a possible rate cut in September 2025. That lifted nearly all assets, including gold.”
Data from the CME FedWatch tool shows the probability of a 25-basis-point rate cut in September 2025 jumped to 85%, up from 75% before Powell’s remarks. Powell also highlighted the significance of upcoming labor and inflation data ahead of the Fed’s policy meeting on September 16-17.
Gold tends to perform well in a low-interest-rate environment, as it offers no yield and becomes more attractive compared to interest-bearing assets.
Beyond Powell’s comments, U.S. President Donald Trump made headlines by declaring he would fire Fed Governor Lisa Cook if she does not resign, underscoring his efforts to increase influence over the central bank.
Meanwhile, physical gold demand across key Asian hubs remained subdued due to volatile prices, though Indian jewelers continued buying ahead of the major festive season.
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