Gold holds steady early Wednesday despite being pressured by a strengthening dollar, supported by the Fed turmoil, as U.S. President Donald Trump’s standoff with the Federal Reserve continues.
The stronger dollar makes gold a less attractive alternate investment, particularly for the holders of other currencies. But the yellow metal is a hedge against economic and geopolitical uncertainty, so it’s getting a boost after Trump said he was removing Fed Governor Lisa Cook, citing allegations that she committed mortgage fraud. The comments threatened the central bank’s independence at a time when investors are expecting it to begin loosening monetary policy.
December gold futures rose 0.5% Tuesday to settle at $3,433.00 an ounce on Comex, and the front-month contract rallied 0.4% in the first two days of the week. Bullion gained 1.2% in July after slipping 0.2% in June and losing 0.1% in May. It’s up 30% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $0.20 (+0.01%) an ounce to $3433.20 and the DG spot price is $3383.70.
It’s unclear whether Trump has the authority to remove Cook, with the Fed noting that the president can only do so “for cause.” Cook has said she won’t step down and will challenge Trump’s action in court.
The Fed statement said that “long tenures and removal protections for governors serve as a vital safeguard, ensuring that monetary policy decisions are based on data, economic analysis and the long-term interests of the American people.” Cook’s appointment was confirmed by the Senate.
Trump is pressuring the Fed to sharply lower interest rates. Fed Chairman Jerome Powell last week increased expectations of upcoming U.S. interest rate cuts, which are typically bullish for gold. The central bank has hesitated to resume rate cuts this year amid Trump’s tariffs policies and fears of escalating inflation.
But more than 88% of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates next month. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. The Fed kept interest rates unchanged last month at 4.25% to 4.50%, a rate that it’s held all year.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, is due out Friday with July data and will provide investors with a new snapshot on the state of the economy and the central bank’s likely next moves. U.S. GDP data for the second quarter comes out Thursday along with weekly initial jobless claims. Consumer sentiment data for August also comes out Friday.
Front-month silver futures slipped 0.2% Tuesday to settle at $39.12 an ounce on Comex, and the December contract dropped 1.1% in the first two days of the week. Silver rose 1.5% in July after increasing 9.5% in June and adding 0.6% in May. It rose 21% in 2024. The September contract is currently down $0.231 (-0.60%) an ounce to $38.375 and the DG spot price is $38.28.
Spot palladium increased 0.2% Tuesday to $1,107.00 an ounce but is down 2.3% so far this week. Palladium climbed 8.8% in July after surging 14% in June and advancing 2.8% in May. Palladium dropped 17% last year. The DG spot price is currently down $3.50 an ounce to $1096.00.
Spot platinum rose 0.2% Tuesday to $1,351.90 an ounce but is down 1.1% so far this week. It dropped 3.9% in July after climbing 27% in June and rising 8.6% in May. Platinum lost 8.4% in 2024. The current DG spot price is down $10.60 an ounce to $1348.80.
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