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Gold prices recover as Powell says no rate hikes until inflation rises 'significantly'

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Editor's Note: The article was updated to reflect changes in the gold price.

(Kitco News) - Gold prices recovered after giving up all previous daily gains as Federal Reserve Chair Jerome Powell hinted that three rate cuts could be enough “insurance” for the time being.

Powell said that current state of policy "likely to remain appropriate" unless there is “a material re-assessment” of Fed’s outlook. 

At the same time, Powell said that he is not ready to start raising rates either. “We would need to see a significant move up in inflation before we could consider raising rates,” he said during the press conference, which followed Fed’s interest rate announcement. 

The Fed said it cut rates for the third time this year, lowering the interest rate band to between 1.50% and 1.75%. 

After digesting Fed’s move and Powell’s comments, gold prices were trading just under the $1,500 level after briefly losing all daily gains. December Comex gold were last at $1,497.20, up 0.44% on the day.

In its October rate statment, the Fed dropped its comment about "acting as appropriate” from its statement and replaced it with a pledge to "continue to monitor” economic outlook. The statement also revealed that there were two votes opposing the third cut.

Fed’s outlook is for moderate growth to close to 2%, Powell added, stating that “ the U.S. economy is growing at a moderate rate.”

In terms of inflation, Powell noted that it is running low and a lot will need to change for the Fed to be ready to hike rates.

“We would need to see a significant move up in inflation” before we could consider raising rates, he told reporters. “Inflation keeps running below our key objectives. Inflation pressures remain muted … Below target inflation could lead to a long-term slide in inflation expectations."

Live 24 hours gold chart [Kitco Inc.]

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