Gold soared to a historic high of $3,500 per troy ounce on Tuesday, marking a new record as market jitters over U.S. economic leadership sent investors flocking to safe-haven assets. The rally came as the dollar slid further and concerns over the Federal Reserve’s independence intensified following President Donald Trump’s latest verbal assault on Fed Chair Jay Powell.
The Financial Times reported that the price of gold jumped 2.2 percent, while the Japanese yen strengthened to below ¥140 per dollar — levels not seen since September. The turbulence in markets follows a sharp escalation in Trump’s criticism of Powell, whom he labeled “Mr Too Late” in a Monday post on his Truth Social platform, demanding the Fed lower interest rates “NOW.”
Trump’s remarks have exacerbated fears of political interference in the central bank’s policy-making, a concern that analysts say could destabilize the U.S. economy. His comments come on the heels of Powell’s warning last week that the administration’s aggressive tariff policies risked stoking inflation and slowing growth.
The Financial Times also noted that the ongoing tension between Trump and the Federal Reserve is posing a new dilemma for investors already wary of geopolitical risks and shifting monetary policy. RBC analysts said that headlines questioning the Fed’s independence and Trump’s ability to potentially dismiss Powell have deepened uncertainty in an already volatile market environment.
Markets responded sharply: the S&P 500 fell 2.4 percent on Monday, while the Nasdaq dropped 2.6 percent. European markets followed suit, with futures for the Stoxx Europe 600 down 0.3 percent on Tuesday. Meanwhile, the U.S. dollar declined 0.2 percent against a basket of major currencies, extending its losses to nearly 10 percent for the year.
Though Treasury yields ticked up slightly — with the 10-year yield rising to 4.43 percent and the 30-year yield reaching 4.93 percent — the broader sentiment remains risk-averse.
Michael Feroli, chief U.S. economist at JPMorgan Chase, warned that any erosion of the Fed’s autonomy could further complicate inflation control efforts, already under pressure from tariff-related price hikes. “Any reduction in the independence of the Fed would add upside risks to an inflation outlook that is already subject to upward pressures,” Feroli said.
Gold, long seen as a hedge against inflation and economic uncertainty, has emerged as a clear winner amid the political tumult. Its 33 percent rise this year reflects investor anxiety over U.S. fiscal and monetary policy trajectories. “There does seem to be some flows into gold,” Mitul Kotecha of Barclays told the Financial Times, pointing to broad-based demand from global investors.
As Trump ramps up his economic messaging ahead of the November election, financial markets appear braced for a prolonged period of heightened volatility.
