The gold price continues its cautious upward trend, hovering near the $3,350 mark on Thursday as investors respond to growing concerns over the independence of the Federal Reserve. US President Donald Trump’s reported consideration of replacing Fed Chair Jerome Powell has heightened market anxiety, driving demand for safe-haven assets like gold. Meanwhile, expectations of a rate cut in July further pressured the US Dollar, boosting gold for the second day in a row.
Fed Tensions Weaken Dollar
Trump’s dissatisfaction with Powell’s reluctance to cut rates has reignited debate over the Fed’s autonomy. Powell, in contrast, emphasized that the Fed would wait to act until the inflationary effects of recent tariffs become clearer. This policy clash has pushed the US Dollar to a three-year low, making gold more attractive to investors seeking shelter from uncertainty.
Truce Limits Gold’s Rally
However, optimism over a ceasefire between Israel and Iran has calmed global risk sentiment. Trump declared the truce a victory, despite lingering questions about the extent of damage to Iran’s nuclear infrastructure. This sense of geopolitical stability has curbed aggressive buying of gold, which traditionally thrives during global unrest.
Read: Gold Prices Slip Again in Pakistan Amid Global Decline
Market Awaits Key US Data
While gold maintains a modest positive bias, traders remain cautious ahead of crucial US economic indicators. These include the final Q1 GDP figures, weekly jobless claims, durable goods orders, and pending home sales. Comments from key Federal Open Market Committee (FOMC) members are also expected to offer insight into the Fed’s policy direction.
Inflation Data in Focus
Looking ahead, the market’s focus will shift to Friday’s release of the US Personal Consumption and Expenditure (PCE) Price Index. As the Fed’s preferred inflation gauge, this data will likely influence expectations around interest rate moves. A soft reading may support gold prices further, while a surprise uptick could weigh on the metal.
For now, gold struggles to break out convincingly from its two-week low near $3,300. Investors are watching closely for stronger signals before making bold moves.
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