Gold slides after Powell doubles down on tight monetary policy

Gold fell over 1% on Friday after Federal Reserve Chair Jerome Powell in his speech at Jackson Hole said the U.S. economy needed a tight monetary policy until inflation was under control, Reuters reported.

Powell said this could mean slower growth, but did not hint at what the Fed might do at its September policy meeting.

Spot gold fell 1.2% to $1,738.14 per ounce by 1335 p.m. ET, en route to fall for a second straight week, down about 0.4% so far. U.S. gold futures settled 1.2% lower at $1,749.8.

Equities and metals are suffering from Powell’s unvarnished reminder that rates will need to be high for longer and that perhaps 75 bps is the default for September unless the totality of the data suggests otherwise, said Tai Wong, a senior trader at Heraeus Precious Metals in New York.

Gold is considered a hedge against economic risks, but rising interest rates dent the appeal of the non-yielding asset.