Gold jumps the most in 3 weeks when Powell, China and Trump collide by Investing.com

By Barani Krishnan

Investing.com – Things did not go exactly as the markets thought, but the long golden years did not complain.

Federal Reserve Chairman Jay Powell 's decision to leave the markets unresolved in the face of future central bank rate movements should have led to a drop in the price of gold on Friday. But China's announcement of new tariffs on US products and President Donald Trump's demand that US companies withdraw from the republic should instead assemble in the yellow metal.

The biggest gathering in three weeks, actually.

, reflecting bullion trading, increased $ 29.77 or 2% to $ 1,527.89 per ounce at 2:25 pm ET (6:25 pm GMT). Bullion has sometimes oscillated between $ 1,500 this week, with some investors betting that the Fed would not add to its dovish tone before the Jackson Hole conference.

for delivery in December, traded on the Comex division of the New York Mercantile Exchange, settled up $ 29.10, or 1.9%, to $ 1,537.60 per ounce of settlement after settlement.

It was the biggest gold rally in three weeks and the first for some time, driven by safe haven purchases over China. The precious metal had spent much of the early April to mid-August in range trading as long positions in the market were looking for signs of Fed rate cuts to strengthen its positions.

The US economy is in a "favorable position" and the Fed "will do the right thing" to keep the current economy on track, Powell said Friday in a speech to the Fed's annual conference of central bankers at Jackson Hole, in the Wyo.

Rate cuts are weakening the US dollar, making the greenback products cheaper for the rest of the world. Dollar prices of commodities such as gold often increase automatically after a rate cut, adjusting to the phenomenon.

The Fed cut rates last month for the first time in a decade, losing 25 basis points. Markets expect the central bank a similar reduction in September. But the Fed chief has been confronted with Trump's relentless criticism and pressure, which has accused Powell of his slowness in reducing growth rates as the real reason for slower growth than the US economy wants. .

At the same time, China retaliated against the US plan to impose an additional 10% tax on Chinese goods, including consumer electronics, for $ 300 billion, through two phases of tariffs that will come into effect on December 1 and 15.

This made Trump livid, pushing him to order American companies to move their manufacturing facilities to the People's Republic elsewhere. It was not known if one or the other of the companies would comply with the president. Trump also warned of further retaliation.

The gold rally on Friday saw the futures contract rise by around 1% over the week. It increased by 7% in August and by 20% for the year.