Will the Fed’s Jackson Hole Symposium drive gold prices up or down? [Video]

The most eagerly awaited meeting of central bankers in 2024 and possibly the “most decisive moment” in the history of monetary policy is finally here: politicians from around the world are meeting at the Federal Reserve’s annual Jackson Hole Economic Symposium.

The Fed's annual Jackson Hole Economic Symposium, considered the Davos of central bankers, brings together the world's leading macroeconomists to influence future policy on interest rates, inflation and global economic growth – all issues that have enormous potential to significantly move markets.

Last year, central bankers from advanced economies used the Jackson Hole Economic Symposium as a platform to spread the message that significant progress had been made in the fight against inflation, but they were far from ready to declare victory over inflation just yet.

This year, however, the tone will be different. Officials at the European Central Bank and the Bank of England have already cut interest rates this year. It is now increasingly likely that the Federal Reserve will follow suit – and make its first rate cut next month.

The big question now is: How many interest rate cuts will the Fed make this year?

The answer to this question could be provided by the speech given by the Chairman of the US Federal Reserve, Jerome Powell, on Friday. He is likely to lay the foundation for the long-awaited turnaround and provide insights into future monetary policy.

A much weaker-than-expected US labor market report sparked fears of a recession at the beginning of the month. Traders then increased their bets that the Fed could cut interest rates more than previously thought.

With a September rate cut all but certain, the debate is shifting to what the easing cycle will look like. The Fed's latest summary of economic forecasts, released at the conclusion of the June FOMC meeting, implies a quarter-percentage-point cut per quarter through the end of 2026.

But according to analysts at GSC Commodity Intelligence, “traders are expecting a more aggressive, front-loaded easing cycle, with the likelihood of rate cuts of a full percentage point before the end of 2024 and then another percentage point in 2025.”

It would be a fair assessment that the course of the rate-cutting cycle will depend on the reasons behind the Fed's cut. Will it cut rates to save the economy from recession, or will it simply normalize rates that have become too restrictive?

Only time will tell, but one thing we know for sure: If the Fed doesn't cut rates enough this cycle, the economy could slide into recession. Conversely, if the Fed cuts rates too quickly, it could stoke inflation again.

Extraordinary times create extraordinary opportunities and right now these markets are a trader's paradise. Regardless of the outcome, the Fed's Jackson Hole Economic Symposium is guaranteed to be a license to print money that traders won't want to miss!

Where are prices headed next? Check out the Commodity Report now for my latest price forecasts and predictions: