Gold Prices Surge Amid Dollar Weakness and Trump's Fed Comments

Gold and silver prices have seen an uptick, primarily fueled by a weakening U.S. dollar and escalating political uncertainty surrounding the Federal Reserve's leadership. Reports indicating that former U.S. President Donald Trump is considering replacing Federal Reserve Chair Jerome Powell as early as September or October have significantly contributed to market unease. Trump has publicly criticized Powell, labeling him as "terrible" for his stance on interest rates and openly contemplating his removal or replacement with a more dovish candidate, which could lead to a more aggressive rate-cutting cycle.
This political rhetoric has cast a shadow over the future independence of the U.S. central bank, prompting investors to seek safe-haven assets like bullion. The dollar, meanwhile, has plummeted to its lowest level since March 2022, making gold more attractive and affordable for international buyers. This "sell America" theme, driven by political instability and concerns over Trump's trade policies, has seen the dollar index decline by 10% this year, pushing currencies like the euro and Swiss franc to multi-year highs.
Despite the broader rally in precious metals, gold's gains have remained somewhat contained, facing resistance near the $3,345–$3,360 zone, with spot gold hovering around $3,339 per ounce on Thursday. Silver similarly encountered resistance near $36.42 per ounce. A recent ceasefire between Middle Eastern powers, specifically Israel and Iran, has helped calm geopolitical tensions, fostering a mild recovery in equity markets and dampening some of the immediate demand for safe-haven flows into gold. However, the overarching institutional uncertainty stemming from the political backdrop continues to provide underlying support for precious metals.
Market attention is now keenly focused on a series of upcoming U.S. economic data releases, including jobless claims, durable goods orders, and final Q1 GDP figures. The most critical release is Friday’s Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve’s preferred inflation metric. A softer PCE print would likely reinforce the case for monetary easing, potentially pushing gold prices higher, while a hotter-than-expected number could stall the current upward trend. For now, gold and silver remain largely range-bound as traders await clearer signals from both policy developments and economic indicators to define their next significant move.