ThePrint ThePrintEconomix: How one sentence from US central bank changed gold prices & the unconventional economic theory
Dec 3, 2025
Central bank communication has become crucial, impacting markets more than actual policy changes. A single remark from Jerome Powell about rate cuts can sway gold prices dramatically. The discussion dives into why gold fell after a Fed cut, revealing how markets price future expectations rather than just today's actions. India’s heavy gold consumption makes it especially vulnerable to these shifts. Ultimately, the takeaway is that perception about the future holds significant weight in market movements.
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Markets Trade On Expected Policy Path
- Markets price expected future policy, not just today's rate move.
- A single change in forward guidance can shift asset prices more than the action itself.
One Sentence That Flipped Gold
- Jerome Powell's line that "a December rate cut is not a foregone conclusion" reversed investor expectations.
- Yields rose, dollar strengthened, and gold fell within minutes despite the 25bp cut.
Priced-In Moves Carry No Surprise
- The October cut was fully priced in so it contained no new information.
- Powell's tone provided the new information that rewrote the market narrative.