Last week, Xau/USD was $3,327.37, up $89.45 or +2.76%.
Granted independence under scrutiny amid Trump Powell’s clash
The market focus lit up at the risk of political interference after President Trump threatened to remove Federal Reserve Chairman Jerome Powell. The clash rattles off investors’ trust and revived debates over central bank independence. Historically, similar tensions have driven the demand for gold as a hedge against institutional instability. Legal issues regarding Powell’s tenure only add to market uncertainty.
Tariff escalation causes safe haven rotation
Both the Biden and Trump administrations appear to intend to expand the tariff framework. Recent actions cover key mineral imports and strategic sectors such as semiconductors and pharmaceuticals. These moves have increased geopolitical stress and increased inflation concerns. As trade relations become more tense, investors’ preferences continue to lean towards safe, home-based assets like gold.
Rate policy stalemates strengthen gold’s appeal
The Federal Reserve is cautious, and authorities are seeking more data before shifting policies. Yet, markets are increasingly priced for interest rate cuts, due to slower growth and signs of sustained inflation risk. Gold can benefit either way either way. Relaxing the policy reduces the opportunity costs of holding non-2 assets, but delays in litigation in the face of inflation maintain the role of gold as a hedge.
