The price of gold on Tuesday, April 22, reached a new record high amid scaling and increasing concerns related to the intention of the President of the United States Donald Trump to oust Federal Reserve Chairman Jerome Powell.
According to the media, the mentioned concerns are a factor of significant pressure on investors.
Data from Refinitiv suggests that gold, which is a safer financial bet in the face of economic uncertainty, has risen in price, reaching a new record high of $3,500.05 per troy ounce. Then this indicator decreased to $3,479.5.
Since the beginning of the current year, the gold price has shown an increase of 31%. This metal has become a kind of beneficiary of the present configuration of the United States trade policy, which provides for a significant increase in tariffs on goods imported from almost all countries. Against the background of the mentioned trade measures, intense turbulence is observed in world markets. Under appropriate conditions, gold becomes more in demand as an asset that does not lose its value and even increases its value under the impact of the circumstances of the current configuration of economic reality.
Today, there is a growing interest in so-called safe-haven assets. The corresponding category belongs, including gold. The mentioned interest is related to the decline in confidence in the US dollar. Safe-haven assets are also becoming more popular amid escalating geopolitical risks, the realization of which may have, among other things, large-scale and fundamental economic consequences.
Rania Gule, senior market analyst at XS.com. wrote in a Tuesday research note that the increase in the gold price reflects ongoing concerns about the materialization of a recession scenario in the United States economic system and heightened political tensions.
While the mentioned metal is on a record growth trajectory, investors have been dumping bonds. Heavy selling pressure remained during the trading session. The yield on 10-year Treasuries, which are a benchmark for various debts, is increasing.
The increase in the price of gold was observed after a widespread sell-off in the United States. All three major indexes, including the Dow, the S&P 500, and the tech-heavy Nasdaq Composite, showed declines last Monday, April 21.
The markets have been experiencing high-intensity turbulence for several weeks now. Since then, nothing has happened that would give rise to claims of normalization of the situation. The high tariffs, which are a kind of platform for a trade war, have significantly increased the general nervousness. Moreover, Washington’s harsh trade policy measures and the retaliatory actions of some world capitals, primarily Beijing, have clouded the economic outlook. This statement is confirmed by forecasts from the International Monetary Fund published in the current week.
Fears, which have recently become a kind of dominant mood, have intensified after Donald Trump’s repeated statements signaling his intentions to fire Jerome Powell. Against this background, which is unfavorable in terms of the impact on the economic situation, an increase in volatility has been recorded in stock markets during recent trading sessions. Donald Trump is calling on the central bank of the United States to cut interest rates. At the same time, the financial regulator adheres to a kind of wait-and-see strategy. According to media reports, the Fed prefers to wait for more clarity in the current turbulent environment, filled with excessive uncertainty, before deciding on lowering the cost of borrowing.
Last week, at an event in Chicago, Jerome Powell said that the tariffs that were imposed by the administration of the President of the United States are unlike anything in modern history. In this context, he separately noted that the mentioned measures of Washington’s trade policy could potentially stoke inflation and drag on economic growth. Some media outlets interpret this outlook statement as a signal that the tariffs of the Donald Trump administration may complicate the Fed’s rate-cutting path.
Since then, the president of the United States has repeatedly lashed out at the head of the US central bank on social media. As part of the relevant public rhetoric, Donald Trump vowed to fire Jerome Powell and called him a loser. Against this background, concerns have emerged that investors may lose confidence in the stability of the United States markets.
At the same time, Asian shares did not show any significant changes on Tuesday.
