Gold prices advanced on Tuesday, reaching their highest level in two weeks, as renewed concerns over the Federal Reserve’s independence spurred safe-haven demand and pressured the United States dollar.
By 3:55 pm AEST (5:55 am GMT), spot gold gained $10.54, or 0.3%, to US$3,376.28 per ounce, edging closer to key resistance at $3,400.
The rally came as investors digested news that U.S. President Donald Trump had dismissed Lisa Cook from her position on the Fed’s board.
The move reignited market concerns about the Fed’s credibility and autonomy, prompting a broad sell-off in the U.S. dollar and shorter-term Treasury yields.
This in turn boosted demand for gold, the Japanese yen, and government bonds as traders sought safety.
Investor sentiment was further shaped by expectations that the Fed could cut interest rates by 25 basis points at its September meeting. Bets on easing were reinforced by Fed Chair Jerome Powell’s dovish tone at the Jackson Hole symposium last week.
Meanwhile, the president warned of a 200% levy on targeted Chinese goods if Beijing fails to give the U.S. magnets and signalled potential additional tariffs and export restrictions on advanced technology and semiconductors.
Despite the dollar’s partial recovery, gold held firm as traders positioned for further volatility. Market participants will now be closely watching a series of mid-tier U.S. data releases later in the day, which could offer fresh clues on the Fed’s policy direction beyond September.
