Gold prices reach unprecedented heights following Trump's persistent criticisms of the Federal Reserve chair.
*Gold Soars Amid Market Chaos: A Closer Look at the Gold Rush and US Stock Market Risks*
The price of gold has skyrocketed to an all-time high on a tumultuous Tuesday, fueled by concerns over President Donald Trump's intentions to dismiss Federal Reserve Chair Jerome Powell.
Gold hit an astounding new record of $3,500.05 per troy ounce early in the day, according to Refinitiv data. As of last trade, it stood at $3,479.5 per troy ounce. The precious metal has surged over 31% this year, making it one of the year's top performers as Trump pushes his global tariff strategy.
This extraordinary rally in gold is driven by a surge in demand for safe-haven assets due to waning confidence in the US dollar and escalating geopolitical and economic uncertainties. According to Rania Gule, senior market analyst at XS.com, this price surge signifies ongoing recession fears in the US economy and exacerbated political tensions.
Conversely, investors have been offloading bonds. Tuesday's trading session saw heavy selling pressure, with the yield on 10-year Treasuries growing despite the inversely proportional relationship between bond yields and prices.
The gold price increase follows a widely publicized sell-off in the US, where all three major indexes – the Dow, the S&P 500, and the tech-heavy Nasdaq Composite – suffered losses on Monday. Weeks of market turmoil caused by Trump's tariffs have been further exacerbated by his repeated threats to oust Powell and public attacks on him, intensifying stock market volatility.
Last week, Powell warned at an event in Chicago that Trump's tariffs posed unique challenges, with the potential to fuel inflation and hinder economic growth. The stark statement underscores the possibility that tariffs could complicate the Fed's rate-cutting plan.
Since then, Trump has repeatedly lashed out at Powell on social media, pledging to fire him and branding him a "loser." Trump's assault on the Fed's independence has sparked concerns that investors might lose faith in the stability of US markets.
Asian shares ended Tuesday's trading session relatively flat. Japan's Nikkei 225 index recorded a 0.2% decrease, while South Korea's Kospi slipped less than 0.1%. Hong Kong's Hang Seng index was approximately 0.8% higher.
Gold's meteoric rise is rooted in various factors. Institutional investors are hedging against policy-driven market instability, as they pour money into gold ETFs, attracting $21B in the first quarter of 2025. Furthermore, gold's appeal lies in its status as a safe-haven asset amid Trump's proposed tariffs (e.g., 145% on Chinese imports) and unpredictable trade policies, which some analysts fear could spark a global economic downturn.
The ongoing uncertainty surrounding the Fed chair position adds to the market turmoil. Trump's criticism of Powell for moving too slowly to cut rates and his efforts to examine Powell's removal have heightened concerns about central bank independence, accelerating bets on rate cuts and weakening the USD, thus supporting gold prices.
In summary, gold is expected to maintain its bullish trend while the US stock market is exposed to downside risks from the unpredictable fiscal-monetary crosswinds generated by Trump's erratic policies.
- The surge in gold's price is significantly influenced by the instability in the US financial market, as indicated by the sell-off in the US stock market, which led to losses for all three major indexes - the Dow, the S&P 500, and the tech-heavy Nasdaq Composite.
- As concerns over President Donald Trump's intentions to dismiss Federal Reserve Chair Jerome Powell persist, investors are turning to gold as a safe-haven asset, evidenced by the influx of $21B into gold ETFs in Q1 of 2025.
- The Fed's independence is under scrutiny due to Trump's repeated threats to oust Powell and his criticism of the Fed chair for moving too slowly to cut rates. This turmoil is predicted to weaken the USD, further driving up gold prices.
- The yield on 10-year Treasuries has increased despite the inverse relationship between bond yields and prices, adding to the market instability that benefits gold.
- As Trump's tariff strategy continues to escalate geopolitical and economic uncertainties, gold is expected to continue its bullish trend due to its status as a hedge against policy-driven market instability, making it one of the year's top performers in the finance and investing realm of the general news and policy-and-legislation sectors.
