Analysts warn: Political interference in the Federal Reserve is "playing with fire," as safe-haven demand drives gold prices to rise continuously
On Wednesday, gold futures rose slightly, reversing earlier losses, due to increasing concerns about the independence of the Federal Reserve. Trump's attempt to fire Fed Governor Cook triggered a rise in safe-haven demand. Analysts pointed out that the reasons for the rise in gold include Fed Chairman Powell hinting at possible interest rate cuts, as well as ongoing geopolitical risks and trade tensions. Gold futures closed up 0.5%, at $3,404.60 per ounce, marking the highest closing price since August
According to Zhitong Finance APP, on Wednesday, gold futures rose slightly, reversing earlier losses during the day. This came after U.S. President Trump attempted to fire Federal Reserve Governor Lisa Cook, raising ongoing concerns about the independence of the Federal Reserve.
British brokerage SP Angel pointed out in a report that gold has risen for two consecutive days, driven by two main factors: first, Federal Reserve Chairman Jerome Powell signaled "a possible rate cut in September" at the Jackson Hole annual meeting last Friday; second, Trump's attempt to dismiss Cook. Concerns about whether Trump respects the independence of the Federal Reserve have intensified, significantly boosting the safe-haven demand for gold.
James St. Aubin, Chief Investment Officer of Ocean Park Asset Management, stated, "When you start to undermine the market's trust in the monetary policy of the issuer of the global reserve currency, you are playing with fire," adding, "If the market believes that the Federal Reserve's policy-making is subject to direct political interference, the attractiveness of U.S. assets will decline significantly."
Although the legal tug-of-war surrounding "Trump's attempt to dismiss Federal Reserve Governor Cook" may last for months, analysts generally believe that there are two other more enduring risks supporting higher gold prices: on one hand, multiple geopolitical risks will persist in the long term; for example, Ukraine has recently intensified its strikes on Russian energy infrastructure. On the other hand, trade tensions have not eased, and the market increasingly believes that a new round of tariffs from the U.S. could weaken global economic vitality. These factors suggest that gold prices may long include a solid risk premium, still expected to receive strong support at high levels.
Gold futures for August delivery on the New York Commodity Exchange (Comex) rose 0.5% to $3,404.60 per ounce, marking the highest closing price since August 8; during the same period, silver futures for August delivery rose 0.3% to $38.689 per ounce.
Related exchange-traded funds (ETFs): SPDR Gold ETF (GLD.US), Gold Miners ETF-VanEck (GDX.US), Junior Gold Miners ETF-VanEck (GDXJ), Silver ETF-iShares (SLV), (PSLV), GlobalX Silver Miners ETF (SIVR), etc
