Gold Rallies as Trump Eyes Jerome Powell’s Replacement

Gold prices climbed sharply Friday as President Trump escalated his campaign to replace Federal Reserve Chair Jerome Powell. The move fueled investor anxiety, sending a rush into safe haven assets and lifting gold to its highest level this month.

Traders cited mounting uncertainty over U.S. monetary policy and Trump’s threats of new tariffs as key drivers behind the latest gold rally. The precious metal is now up for the fourth week in the past six, gaining 0.7% this week alone.

Could Trump’s Fed shakeup trigger more gold gains?

The White House has intensified its efforts to pressure Powell and the Federal Reserve, with Trump openly criticizing the chair’s refusal to cut interest rates. Advisors are reportedly working on a shortlist of candidates to succeed Powell, whose term ends in May 2026.

Trump’s public campaign to replace Powell has unsettled markets, with many investors fearing a loss of central bank independence. Analysts warn that any abrupt changes at the Fed could spark further volatility and drive even more demand for gold as a hedge.

Did you know?
Jerome Powell is only the second Federal Reserve chair in history to be nominated by one president and then publicly targeted for replacement by another during his term.

Will uncertainty at the Fed unsettle global markets?

The prospect of a “shadow chair,” a replacement named before Powell’s term expires has already raised alarms among economists and traders. Such a move could create confusion over who is steering U.S. monetary policy, potentially leading to conflicting signals and market turmoil.

Any attempt to remove Powell would trigger a significant market reaction, even before courts could intervene, said a former Fed governor. The uncertainty has made gold especially attractive for those seeking stability amid the chaos.

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Gold’s weekly winning streak continues amid policy drama

Gold futures jumped 1.2% to $3,356 a troy ounce on Friday, reversing earlier losses and turning positive for the week. This marks the fourth positive week out of the past six, as investors continue to seek refuge from escalating trade and policy risks.

Safe haven flows have accelerated recently, with traders citing both the threat of a 35% tariff on Canadian goods and the ongoing drama over the Fed chair as primary catalysts. The narrative has kept gold in the spotlight for global investors.

Trump’s pressure campaign rattles investors

Trump’s advisors are employing a range of tactics to increase public and bureaucratic pressure on Powell, aiming to align the Fed more closely with the president’s economic agenda. However, legal and political obstacles remain, and any attempt to force Powell out could spark a prolonged battle and market instability.

Several names have emerged as possible successors, including Treasury Secretary Scott Bessent, National Economic Council Director Kevin Hassett, and Fed Vice Chair Michelle Bowman. While each candidate presents a unique strategy, it appears that they are all inclined to endorse Trump's pursuit of lower interest rates.

With trade tensions simmering and the Federal Reserve's future leadership in flux, gold's role as a safe haven seems poised to expand. Investors are watching closely for Trump’s next move, knowing that any hint of further instability could send gold prices even higher.