Gold prices reached an all-time high on Tuesday, while stocks fluctuated and the dollar weakened, as US President Donald Trump intensified his criticism of Federal Reserve Chairman Jerome Powell, raising concerns about the central bank’s independence.
Amid the ongoing turmoil from US tariffs, investors are now grappling with heightened anxiety that Trump might attempt to remove Powell from office. Last week, Trump lashed out at Powell, reacting to the Fed Chairman’s warning that the sweeping tariffs could reignite inflation. Trump stated that Powell’s “termination cannot come fast enough” and emphasized that if he wanted Powell out, it would happen “real fast.”
Trump’s recent remarks have only added to market unease. On Monday, the president again targeted Powell, calling for pre-emptive interest rate cuts and labeling him a “major loser” and “Mr. Too Late” on his Truth Social platform. Trump argued that inflation was “virtually” nonexistent, pointing to falling food and energy costs and referencing recent cuts by the European Central Bank.
These comments have fueled fears that Trump is considering an effort to oust Powell. Kevin Hassett, a top economic adviser, confirmed on Friday that the president was exploring his options in this regard.
In response to the growing uncertainty, Wall Street investors rushed to sell US assets, with all three major indexes closing down approximately 2.5 percent on Monday.
“The initial remarks last Thursday had little market impact, but Monday’s renewed criticisms have intensified the ‘sell America’ sentiment,” said Tapas Strickland from National Australia Bank. “Regardless of whether Trump can legally or politically remove Powell, the ongoing confrontations highlight a shift in US exceptionalism and present a significant policy risk for investors.”
In the wake of these developments, gold surged to a new record high of over $3,500, while the US dollar, after experiencing a selloff, remained under pressure against its global counterparts.
Stock markets were volatile as trading resumed after the Easter break. In Asia, major indexes in Tokyo, Sydney, Seoul, Wellington, Taipei, Manila, and Bangkok all saw declines, while markets in Hong Kong, Shanghai, Singapore, Mumbai, and Jakarta saw gains. European markets experienced a mixed session, with London largely unchanged, while Paris and Frankfurt edged lower.
Analysts have warned of a potential market crisis if Trump attempts to fire Powell, with some suggesting such a move could trigger a loss of confidence in the US economy.
“If Powell is removed, we would likely see an immediate surge in volatility across global markets,” said Michael Brown, a strategist at Pepperstone. “Equities would plummet, US Treasuries would be sold off, and the dollar could collapse.”
The threat to the Fed’s independence, analysts suggest, could lead to a global exodus from US-based assets, disrupting the international financial system.
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