Fed Chair to Change: Dollar Strengthens, Gold Falls
Fed Chair to Change: Dollar Strengthens, Gold Falls Donald Trump officially announced Kevin Warsh as his candidate for Federal Reserve Chair on Friday, January 30, 2026 (US time). This announcement immediately sparked volatility as markets assessed that a change in central bank leadership could alter policy direction, particularly regarding interest rates and the strength of the dollar.
Warsh is scheduled to replace Jerome Powell when Powell's term as chair ends in May 2026. However, this change isn't automatic—Warsh still has to go through the Senate confirmation process before officially assuming the Fed's top position.
Here's the "bitter sauce": the confirmation process has the potential to be bumpy. Republican Senator Thom Tillis reportedly threatened to hold up the confirmation process until the investigations surrounding Powell (regarding the Fed building renovation project) are concluded, opening up the possibility of political tug-of-war in the Senate.
From Trump's side, the narrative is tinged with optimism. Trump called Warsh a qualified candidate and even believed he could attract some Democratic support. Trump also dismissed rumors that he asked Warsh to promise an interest rate cut, although he continued to express hope that interest rates could fall.
Why did the market "pick up on the signal" so quickly? Because Warsh is seen as bringing a policy style that could be more pro-dollar/tighter than the most "dovish" scenario the market had imagined. Once those expectations are met, market participants rush to reposition—which typically triggers a strengthening dollar and pressure on yield-sensitive assets.
The effect is even more pronounced because the timing comes after a major rally in many assets and already heavy speculative positions. So, this announcement isn't just political news—it acts as a "trigger" for an already fragile market: as soon as one brick is removed, the others come tumbling down.
Impact on gold and oil prices (while gold is declining): Gold is hit hardest when the dollar strengthens and the market reduces risk—which is what was seen after Warsh's announcement, when gold and silver experienced sharp declines. For oil, the impact tends to be mixed: a stronger dollar can act as a "brake" on prices, but oil is also highly sensitive to geopolitics and supply; when Middle East tensions ease slightly, oil can fall due to profit-taking. (asd)
Source: Newsmaker.id
