XAU/USD: Gold Chases Record $3,400 as Trump’s Efforts to Fire Fed Chief Knock US Dollar

Fresh record high was hit early Monday — markets weren’t sitting idle while Trump was seeking ways to get rid of Fed boss Jay Powell.

🏅 Gold Pulls Toward $3,400

• Gold prices XAUUSD pumped another 2% early Monday, extending the monthly performance to a whopping 9%. And that’s shaping up to be the fourth straight month of gains for the precious metal. Gold blasted toward $3,400 per ounce this morning, hitting a session high of $3,397 for the first time in history. An unusual mix of factors led to the new record.
• Markets are antsy over prospects of Donald Trump getting rid of Federal Reserve chair Jay Powell. In a series of online posts and press comments last week, the US President criticized the Fed boss, saying he’s late to cut interest rates and allow the economy to boom.

⚠️ Trump vs. Powell Heats Up

• “If we had a Fed Chairman that understood what he was doing, interest rates would be coming down too,” Trump said on Friday. He has long argued that Powell isn’t doing a good job at the Fed but hasn’t tried to remove him. Until now — the White House administration is seeking ways to move Powell out of the central bank.
• “The president and his team will continue to study that matter,” White House economic adviser Kevin Hassett said Friday in response to a question whether firing Powell “is an option.”
• Powell has said previously that he cannot be fired by the President as the Fed acts independently from the White House. To this, Powell has said he intends to serve his full mandate through May 2026.

📉 Dollar Sinks to New 3-Year Low

• Why is gold reacting to the upside? Gold’s role in the markets is to provide a safe space for investors to wait out uncertainty and economic or geopolitical jitters. If Powell is indeed let go, his successor is likely to reduce interest rates. Even if that is only a scenario, the greenback is selling off with the dollar index hitting a fresh three-year low under 98.
• Prospects of lower interest rates typically pressure the local currency because low-rate environments stimulate growth but eat into the currency’s ability to yield a good fixed return on deposits. And, traditionally, when the US dollar drops, the price of gold gains.