Gold headed for a third weekly drop as investors weighed the impact of the Federal Reserve’s new approach to setting US monetary policy, with a more relaxed stance on inflation.
Chair Jerome Powell said that the Fed will seek inflation that averages 2% over time, a step that implies allowing for price gains to overshoot. He also noted that “if excessive inflationary pressures were to build or inflation expectations were to ratchet above levels consistent with our goal,” the central bank wouldn’t hesitate to act.
Bullion swung sharply Thursday as investors parsed the speech delivered virtually for the Fed’s annual policy symposium traditionally held in Jackson Hole, Wyoming. It rallied to an all-time high earlier this month as governments and central banks employed stimulus measures to curb the coronavirus pandemic’s damage on economies.