Gold soars to all-time high near $3,500 as Trump-Fed tensions roil markets

Onome Amuge

Gold prices surged to unprecedented levels in Asian trading on Tuesday, propelled by persistent safe-haven buying amid heightened U.S.-China trade tensions and growing unease over President Donald Trump’s plans to reshape the Federal Reserve.

Spot gold climbed 1.7 per cent to reach $3,482.76 per ounce in early Tuesday trading, while June gold futures jumped 1.9 per cent to $3,491.20 an ounce. This latest rally follows a more than three per cent gain on Monday, marking the third consecutive session of record highs for the precious metal. The ascent has been largely attributed to escalating geopolitical risks, robust central bank demand, and lingering inflation worries.

The most recent price surge was ignited by concerns surrounding U.S. monetary policy. President Trump’s administration indicated its intention to explore options for potentially removing Federal Reserve Chair Jerome Powell, with White House economic advisor Kevin Hassett confirming on Friday that the possibility remained under consideration.

President Trump on Monday reiterated his calls for the Fed to lower interest rates, warning of a potential economic slowdown if the central bank failed to act swiftly. This stance clashes with recent comments from Powell, who last week indicated no inclination towards near-term rate cuts, citing potential inflationary pressures and economic uncertainties arising from new tariffs. These developments have fuelled anxieties regarding the independence of the U.S. central bank, sending ripples of concern through financial markets.

The U.S. dollar remained weak, having slumped to a three-year low against a basket of major currencies on Monday. A weaker dollar typically bolsters demand for dollar-denominated assets like gold, making the metal more affordable for investors holding other currencies.

Adding to the risk-off sentiment, U.S.-China trade tensions remain elevated. Beijing issued a strong warning to nations considering trade agreements with Washington that could undermine Chinese interests. The Chinese Ministry of Commerce accused the U.S. of using tariffs and monetary sanctions as tools to coerce countries into limiting their trade with China, emphasizing that any agreements detrimental to its interests would be met with reciprocal countermeasures. 

In other precious metals markets, silver futures gained 0.8 per cent to $32.795 an ounce, while platinum futures rose one per cent to $976.10 an ounce