Gold prices shattered records, briefly touching $3,500 an ounce as President Trump’s threats to remove Federal Reserve Chair Jerome Powell sent shock waves through global markets.
At a Glance
- Gold prices hit an unprecedented $3,500 per ounce amid speculation about Federal Reserve leadership changes
- President Trump’s public criticism of Fed Chair Jerome Powell triggered a flight from US stocks, bonds, and the dollar
- Gold has surged over 30% this year as investors seek safe havens during economic uncertainty
- Goldman Sachs predicts gold could reach $4,000 an ounce by mid-next year
- The dollar fell to its lowest level since 2023 as markets reacted to potential changes in monetary policy
Record-Breaking Gold Rally
Gold prices reached historic highs this week, surging past $3,500 an ounce for the first time before settling slightly lower as profit-taking emerged. The precious metal gained as much as 2.2% on Tuesday, building on Monday’s impressive 2.9% rally. This dramatic price action has pushed gold’s year-to-date gains beyond 30%, establishing it as one of the top-performing major assets of 2025. The immediate driver behind this unprecedented rally has been mounting uncertainty surrounding the leadership of the Federal Reserve and potential shifts in US monetary policy.
As of 7:53 a.m. Singapore time, gold for immediate delivery stood at $3,435.29 an ounce, up 0.3% from previous trading. Other precious metals have also benefited from the market turbulence, with silver, platinum, and palladium all recording notable price increases. The precious metals complex has become a focal point for investors seeking stability during what appears to be a developing monetary policy crisis.
Trump vs. Powell Showdown
At the heart of the market turmoil is President Donald Trump’s escalating public criticism of Federal Reserve Chair Jerome Powell. Trump has taken to social media to express his dissatisfaction with Powell’s management of interest rates, suggesting that the central bank’s policies could harm economic growth. The confrontation has raised serious questions about the independence of the Federal Reserve, a cornerstone institution of the American financial system.
“But there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW” – Donald Trump.
Trump has repeatedly called for interest rate cuts, claiming “There is virtually No Inflation” and suggesting that Powell’s reluctance to lower rates could negatively impact economic performance. These statements, particularly when coming from the president, have stoked fears that political pressure could undermine the Fed’s mandate to make independent monetary policy decisions based on economic data rather than political considerations.
Market Flight to Safety
The potential disruption to Federal Reserve leadership has triggered a significant flight from traditional US assets. The Bloomberg Dollar Index remained flat after suffering a 0.7% decline on Monday, with the greenback falling to its lowest level since 2023. US stocks and bonds have similarly experienced selling pressure as investors reassess risk in light of potential monetary policy uncertainty. This shift away from dollar-denominated assets has directly benefited traditional safe havens.
“Gold surged past $3,500 an ounce for the first time before paring some gains, as concern that President Donald Trump could fire Federal Reserve Chair Jerome Powell triggered a flight from US stocks, bonds and the dollar.” – Bloomberg News.
Alongside gold, other traditional safe-haven assets including the Japanese yen and Swiss franc have rallied as investors seek shelter from market volatility. The trend in gold prices has been further supported by strong inflows into bullion-backed exchange-traded funds and continued central bank purchases, which have acted as a foundation for the precious metal’s remarkable performance. Major investment banks have taken notice, with Goldman Sachs forecasting gold could reach $4,000 an ounce by mid-next year.
