Gold sees little reaction as Powell reiterates economic uncertainty
(Kitco News) - The gold market hovering around $1,800 an ounce is seeing little reaction to the latest comments from Federal Reserve Chair Jerome Powell. He highlights the central bank's response to the devastating COVID-19 pandemic in testimony before the House Financial Services Committee.
Powell provided little new information on monetary policy as he recapped the Federal Reserve's measures taken to protect the economy.
"The crisis was met by swift and forceful policy action across the government, including the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This direct support is making a critical difference not just in helping families and businesses in a time of need, but also in limiting long-lasting damage to our economy," he said in his opening statement. "The passage of the CARES Act by Congress was critical in enabling the Federal Reserve and the Treasury Department to establish many of these lending programs. We are strongly committed to using these programs, as well as our other tools, to do what we can to provide stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.
Although some U.S. States have eased lockdown measures, Powell said that there is still a lot of uncertainty surrounding the economic recovery.
"Output and employment remain far below their pre-pandemic levels. The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus," he said. "A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed."
In the last couple of weeks, surging coronavirus cases has caused many states to halt their reopening plans. Growing economic uncertainty as the COVID-19 pandemic continues to spread unabated has increased gold's safe-haven appeal, which has pushed prices to their highest level since 2011.
August gold futures last traded at $1,801.10 an ounce, up more than 1% on the day.