Fed Shaken, Gold Ready to Fly?
Gold prices held above $3,390/oz on Tuesday after rallying the previous day, buoyed by concerns about the independence of the US central bank following President Donald Trump's attempt to oust Fed Chair Lisa Cook. Trump expressed readiness to fight in court after Cook's lawyers asserted the dismissal was invalid. Cautionary sentiment boosted demand for safe-haven assets, keeping gold strong.
If Trump is successful, he could secure a majority of the Fed's Board of Governors—while the Fed has so far resisted pressure to cut interest rates quickly. However, Fed Chair Jerome Powell recently left open the possibility of a rate cut at next month's meeting. The market's concern: if the rate cut cycle comes sooner than expected, inflation risks could rise again—a combination that typically benefits gold as a hedge.
Gold has risen more than 25% year-to-date, driven by geopolitical and trade tensions. Several large institutions (e.g., Citi, UBS) still see room for upside heading into the end of the year amid strong investment demand. This view is supported by occasional dollar weakness and continued solid central bank buying flows.
Looking ahead, the market awaits the release of the PCE Price Index (the Fed's favorite inflation gauge) on Friday, as well as other US consumption data that could influence the likelihood of a September interest rate cut. A hotter inflation reading could limit the scope for easing—and pose a test for gold's rally—while a more subdued figure could potentially maintain the precious metal's bullish bias. (ayu)
Source: Newsmaker.id
