XAUUSD settled the week at $3327.38, up $89.45 or +2.76%.
Rate Policy Standoff Could Boost Gold Either Way
At the core of the feud is a widening divide over interest rates. Trump wants rapid rate cuts, claiming the Fed “owes it to the American people.” But Powell remains cautious, signaling the Fed prefers to wait for clarity on inflation risks driven by tariffs.
Gold prices tend to gain when rates are cut, as the opportunity cost of holding the metal declines. However, even if Powell resists political pressure, rising inflation concerns could still drive safe-haven flows into gold, reinforcing its appeal as an inflation hedge.
Dollar Weakness Adds Tailwind to Gold Prices Forecast
A deteriorating relationship between the White House and the Fed could undermine global confidence in U.S. financial institutions. Kathy Jones of Schwab warns that firing Powell would likely cause selloffs in both Treasurys and the dollar. Since gold is dollar-denominated, any weakening of the U.S. currency tends to increase global demand and pricing power for the metal.
Legal Risks and Market Volatility Keep Gold in Focus
Uncertainty around whether Trump can legally remove Powell adds another layer of unpredictability. Betting markets have increased the odds of Powell’s departure by year-end, and volatility concerns are mounting. Senator Warren warned such action could “crash markets,” while Evercore ISI’s Krishna Guha noted it would push markets toward stagflation risk.
