Trump's Blistering Attacks on Powell Fuels Gold Prices to Record Heights
Gold hits unprecedented high of $3,500 for the first time.
In a move reminiscent of a rollercoaster ride, U.S. President Donald Trump's relentless attacks on Federal Reserve Chair Jerome Powell are sending shockwaves through the financial world, with gold prices skyrocketing. Gold, the venerable treasure for tough times, has shattered the $3,500 per ounce (€3,081) barrier, streaking ahead like never before. "By stoking more doubt, Donald Trump is fanning the flame of ambiguity," asserts Thomas Altmann of QC Partners.
- Trump's Tumultuous Stock Market Tango
Until now, investors had clung to the Fed for maintaining its autonomy, making informed decisions based on their mandate for full employment and price stability. On Monday, the tension ratcheted up a notch when Trump ramped up his criticism against Powell. Tracing the blame for a possible economic slowdown to the Fed's reluctance to trim interest rates according to Trump's wishes, he unleashed a barrage of criticism on Powell, sarcastically dubbing him "Mr. Too Late" and a "big loser."
What's This Mean for Gold Prices?
- Stirring Up a Storm: Trump's barrage of criticism against Powell unleashes a gust of uncertainty that can sentinel financial markets reeling. This uncertainty often breeds volatility, with gold prices potentially spiking as nervous investors flock towards safe-haven assets[2][3].
- Rates and Ripples: Trump's calls for lower interest rates can ripple through market expectations. When interest rates plummet, the dollar weakens, making gold an increasingly attractive bet. However, should the Fed remain firm against rate cuts due to inflationary concerns, gold prices may quiver or dance to the tunes of other economic indicators[3].
Stirring the Stock Market
- Sentiment Sway: Trump's barbs can lend a dark cloud to the stock market's horizon, with negative sentiment potentially causing the market to take a tumble. Such negativity can dampen investor confidence, tugging at stock prices[1][2].
- Policy Uncertainty: The ongoing spat between Trump and Powell can feed a growing mushroom cloud of economic policy uncertainty. This uncertainty can deter investors, leading to less activity in the stock market, and possible dips in stock prices[1][3].
- Rate Policy Rumba: Trump's demands for interest rate cuts target economic growth, which could revive the stock market if successful. However, if the Fed maintains a firmer stance on rates to combat inflation, the economic growth may suffer and stampede the stock prices[3].
Ultimately, the effects of Trump's criticism on gold prices and the stock market are intricate and subject to a host of economic factors, including interest rate decisions, inflation, and the broader market mood.
- A Clash in the Financial Realm: Trump's relentless criticism on Powell in the realm of politics could fuel a surge in gold prices, as investors, fearing economic uncertainties, might seek safe-haven assets like gold.
- Investment Vortex: The clash between Trump and Powell on interest rate policies could create a vortex in the general-news sphere, with the outcome potentially influencing the direction of both gold investing and the stock market.
