Gold Sets New All-Time High As Trump Takes Aim At the Fed

 

Gold Sets New All-Time High As Trump Takes Aim At the Fed

(Bullion News Network) – Gold soared to another all-time high today, crossing $3,425/ozt for the first time ever as investors grapple with an increasingly uncertain economic climate. U.S. President Donald Trump issued another challenge to Federal Reserve Chair Jerome Powell on Monday, urging the economist to preemptively cut rates and accusing him of intervening in 2024 to assist Democrats in the presidential election. The public challenge, posted on conservative social media site Truth Social, revived concerns that the White House may take steps to end the longstanding independence of the Federal Reserve. Wall Street slid as a result, with the Dow dropping 2.48%, the S&P 500 losing 2.36%, and the Nasdaq sliding 2.55%.

The stock market rout coincided with the president’s latest attack on the central bank leader, but it comes on the heels of another comment from President Trump last Thursday. Trump said in a Truth Social post that the “termination [of Powell] cannot come fast enough”. Speaking to reporters at the White House, President Trump expanded on his position, saying that if he “wants him out, he’ll be out of there real fast” and adding that he is “not happy with him.” President Trump has maintained that the Federal Reserve is lagging with its interest rate cuts. Last week, the central bank of Europe cut rates, reviving the years-long conflict between Trump and Powell. In a Truth Social post today, Trump referred to Powell as a “major loser,” urging him to cut rates while accusing him of political bias.

As the White House doubles down on its attacks on the Federal Reserve, economists and traders are concerned about what the suggestion of ending Fed independence could mean for monetary policy. The independence of the Federal Reserve plays a role in investor confidence in the institution, economists say. Because the Fed is independent of the executive branch, traders typically expect the central bank to act without preference to policy or political party. If Trump were to break with longstanding precedent and take aim at the independence of the Federal Reserve, it could have lasting implications on both the Fed’s approach to monetary policy and the public’s perception of the institution’s effectiveness in pursuing nonpartisan economic objectives.

The conflict between the president and the Federal Reserve has taken center-stage as the central bank attempts to anticipate the potential economic impacts of Trump’s extensive tariffs. Chair Powell said last week that the president’s tariffs could pose a “challenging scenario” for the Federal Reserve as it works toward its dual mandate of lowering inflation and maximizing employment. The unprecedented slate of tariffs on major US trade partners, paired with an escalating trade war between the U.S. and China, has revived fears that consumer prices may be on the rise. 

Amid another flight to safe haven assets, demand drove the price of gold to an all-time high of over $3,425 per troy ounce on Monday to start the trading week. Prices rose further after American markets closed, with gold adding another $10 to set another all-time high at $3,435/ozt. Silver pulled back marginally during the day but recovered a couple cents after market close. The lopsided price action drove the gold-silver ratio to a years-long high above 104:1. The last time the GSR climbed beyond 103:1 was in April of 2020 during the heights of the COVID-19 pandemic. 

U.S. leading economic indicators came back worse-than-expected this morning, clocking in at -0.7% compared to a median forecast of -0.5%. On Wednesday, traders will be able to view several economic data reports, including the S&P flash U.S. services and manufacturing PMI, as well as a new home sales report for the month of March. On Thursday, initial jobless claims for for April 19th will headline the economic data releases. It will be followed by existing home sales and durable-goods orders. On Friday, traders will end the week with a final consumer sentiment report for the month of April. Analysts expect the consumer confidence index to remain unchanged from March at 50.8. 

Gold will end Monday at an all-time high above $3,435/ozt.