Gold surges to a new record high above $3400 an ounce early Monday as the dollar tumbles further on Trump administration criticism of the Fed which was seen as threatening the central bank’s independence.
The U.S. currency fell to the lowest level since early 2024, making dollar-denominated gold more attractive to holders of other currencies. Worries about the effect on the global economy of U.S. tariffs and the ongoing trade war also sent risk-off investors flocking to the yellow metal.
June gold futures rose 2.6% last week to settle at $3,328.40 an ounce on Comex. Financial markets were closed Friday for Good Friday. Bullion gained 11% in March after rising 0.5% in February and adding 7.3% in January. It rallied more than $500, or 19%, in in the three months ended in March, the best quarter since 1986. The metal rose 27% in 2024, its biggest annual gain since 2010. Currently, the June contract has soared $96.60 (+2.90%) an ounce to $3425.00 and the DG spot price is $3420.00.
U.S. President Donald Trump said last week that Fed Chairman Jerome Powell’s “termination” for not cutting interest rates quickly “cannot come fast enough!” The day before, Powell had warned about the economic effects of Trump’s tariff policy.
But there’s a question about whether the president has the authority to remove a Fed chair, since it’s legally an independent institution. But Trump has already removed members of long-independent agencies. Trump appointed Powell in 2018, and he was reappointed by then-President Joe Biden in 2022. Powell’s term doesn’t end until May 2026, but National Economic Council Director Kevin Hassett said Friday that the Trump administration has been looking for ways to remove him sooner.
Fed officials including Powell have said that the Trump tariffs are likely to raise inflation and unemployment. High interest rates were imposed during the pandemic to curtail inflation.
The Fed has been widely expected to continue interest rate cuts this year, most likely in the summer, though the tariffs and associated market volatility have raised questions about by how much and when. Most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in June but keep them unchanged at the central bank policymakers’ next meeting in May. Lower interest rates are typically bullish for gold.
The Fed left rates unchanged at 4.25% to 4.50% at policymakers’ last meeting in March but reduced rates three times in 2024. 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. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
A number of Fed officials are scheduled to speak this week and may respond or provide signals about their thinking on monetary policy. The Fed’s Beige Book report on the country’s economic condition, comes out Wednesday, and initial jobless claims come out Thursday. April consumer sentiment data comes out Friday.
Front-month silver futures gained 2.7% last week to settle at $32.78 an ounce on Comex as the most-active contract rolled to July from May. Silver advanced 9.9% in March after retreating 2.4% in February and adding 10% in January. It gained 21% in 2024. The July contract is currently up $0.450 (+1.37%) an ounce to $33.230 and the DG spot price is $32.85.
Spot palladium increased 4.8% last week to $967.00 an ounce. Palladium rose 7.3% last month after retreating 10% in February and advancing 11% in January. Palladium dropped 17% last year. Currently, the DG spot price is down $22.30 an ounce to $947.50.
Spot platinum rose 3.1% last week to $976.50 an ounce. Platinum increased 6.7% in March after sliding 4.7% in February and gaining 8.4% in January. Platinum lost 8.4% in 2024. The DG spot price is currently down $4.70 an ounce to $973.80.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.