Gold Hits $3,500 as Trump’s Fed Broadside Sparks Flight to Haven
Gold surged past $3,500 an ounce for the first time before paring some gains, as concern that President Donald Trump could fire Federal Reserve Chair Jerome Powell triggered a flight from US stocks, bonds and the dollar.
Bullion gained as much as 2.2% on Tuesday to briefly touch $3,500, before easing as traders took profits.
Safe havens such as the yen, the Swiss franc, and gold have rallied in recent sessions following Trump’s repeated calls on the Fed to cut interest rates immediately, a move seen as a threat to the central bank’s independence that drove the dollar to the lowest since 2023.
“But there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump said on social media on Monday, referring to Powell.
Bullion has surged about 32% this year, outperforming nearly every other major asset class, as investors flee equities exposed to an expanding trade war.
Typically in risk-off moments, traders turn to US government debt. But given a recent selloff in Treasuries and the US fiscal position generally, gold is now “the only true safe haven left,” according to analysts at Jefferies Financial Group Inc.
“Gold’s rapid ascent this year tells me that markets have less confidence in the US than ever,” said Lee Liang Le, an analyst at Kallanish Index Services.
“The ‘Trump Trade’ narrative has evolved into a ‘sell America’ narrative,” she said.
Read More: Markets Are Discovering the Real Trump Trade Is ‘Sell America’
The rally began in early 2024, as central banks, seeking to diversify their foreign exchange holdings beyond the US dollar and insulate themselves from the threat of sanctions, became big buyers. More recently, flows into bullion-backed exchange-traded funds have picked up. Trading volumes in China have also seen explosive growth in recent weeks.
Source: Bloomberg
