Powell at Jackson Hole - Gold Price Analysis

Later this week, the world's central bankers will convene again at their annual confab in Jackson Hole, Wyoming. Fed chair Jerry Powell will be the highlight speaker, and his speech on Friday morning may set the tone for what comes next in gold and silver prices.
Ole Jerry has appeared at Jackson Hole multiple times now, and you never know what he's going to say. Sometimes, it's a lengthy speech that details his current thoughts on the direction of monetary policy. Sometimes, though, the speech has been a dud, like in 2022 when his talk didn't even take five minutes!

But Friday's Jackson Hole speech will be his last, as U.S. President Trump has made it abundantly clear that Powell will not be renominated to another term as Fed chair. In fact, Trump quite clearly would remove Powell tomorrow if he could find reason. To that point, when you hear Trump and Republicans discussing the alleged cost overruns on the Eccles building renovations, this is being done to craft a case whereby Trump could prematurely fire Powell "for cause".

Impact On Gold And Silver Prices  

Either way, this will definitely be Powell's last Jackson Hole conference, and I don't expect a brief, nondescript speech on Friday. So how will he go out? What final message will he want to convey to his central bank colleagues?

First, you can almost certainly expect him to extoll the virtues of "central bank independence" and demand that his fellow bankers continue to pursue policy that is free from elected official jawboning. But what else?

You should expect some discussion of steady-to-rising price inflation. Will he express concern over the latest CPI and PPI data, and does he expect further inflation due to the Trump Tariffs? Perhaps he'll elaborate and explain why his concerns make him so reluctant to cut rates now when the inflation rate was higher in September 2024, yet his FOMC still cut the fed funds rate by 50 basis points.
Might Powell address the recent spate of terribly misstated U.S. jobs reports? Had Powell (and everyone else) been given accurate numbers for May and June at the time the new jobs estimates were first reported, would he have already begun the process of lowering the fed funds rate? Maybe he'll touch upon the paramount importance that U.S. data is accurate and reliable.

Lastly, will he provide guidance on how he sees monetary policy evolving over the last few months of 2025? The FOMC won't meet again until September 16-17, and it's unlikely that Powell will make any other public appearances before that time. Will he use his speech this week to provide his thoughts on rate cuts going forward? As you can see below, the fed funds futures market is currently "predicting" an 82% chance of at least two 25 basis point rate cuts before the end of the year, along with a 34% chance of three rate cuts. 

Buy Gold Or Hold Cash?

All of this will occur as the U.S. Dollar Index and COMEX gold prices stand at a crossroads. As the dollar index fell by more than 10% earlier this year, the COMEX gold price rose by more than 25%. However, since May, both have been trading sideways and very near their short-term moving averages. If Powell is seen as "dovish" on Friday, I'd expect the dollar index to commence a new wave lower, perhaps taking it down as far as 95-96. In that environment, you should expect gold to break out of its own consolidation and move sharply higher through $3500.

Dollar Index and Gold Price Charts

  
However, the opposite is also true. If Powell appears "hawkish", you should expect the dollar index to rally in the coming weeks. This would drive another round of automated hedge fund liquidations, and the COMEX gold price will probably fall once more toward the lower end of its current range.
As such, I strongly urge you to watch closely and monitor the markets later this week. Powell's final Jackson Hole speech is slated for 10:00 a.m. ET on Friday, and it's very likely to set the trend for gold prices as August ends and the calendar flips to September.