Fed Chairman Jerome Powell signaled the central bank is ready to cut interest rates this month.  

Even with cooling trade tensions and the addition of 224,000 jobs in June 2019, neither was  enough to change Jerome Powell’s opinion the U.S. economic outlook has changed.  

“Crosscurrents have reemerged,” Powell said, as quoted by CNBC. “Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”

With regards to acting with 3.7% unemployment, Powell also noted, “We don’t have any basis, or any evidence, for calling this a hot labor market.  To call something hot, you need to see some heat, and while we hear lots of reports of companies having a hard time finding qualified labor, nonetheless, we don’t really see wages responding.”

Powell will testify before the U.S. Senate again on Thursday.

Traders are now pricing in 100% probability of a rate cut before the end of July 2019.  

Gold Pushes Higher after Powell Hints at Rate Cut

Gold prices have had an exceptional year so far, running from a January 2019 low of $1,280 to a current price of $1,412.  All thanks to expectations the central bank would cut rates, in addition to geopolitical tensions with Iran and China. In addition, the European central bank has made suggestions of rate cuts to support its slowing economy.  And expectations are running higher that the Bank of Japan could soon ease.  

All are bullish signs for gold.  However, as always, it’s a wait-and-see.