Attack on the Fed boosts Gold – Commerzbank

Following the US President's verbal attack on Federal Reserve Chairman Powell, the price of Gold reached a new record high of $3,500 per troy ounce. In euro terms, the precious metal has now also broken through the 3,000 mark, Commerzbank's commodity analyst Carsten Fritsch notes.

Gold hits record high on Fed uncertainty

"It is less surprising that Trump called on the Fed Chair to lower interest rates — he has done so often enough in the past. What is more surprising is the rapidly increasing intensity of the attacks, as well as the virtual threat to remove Powell from office (according to the National Economic Council Director this was being studied). It is obvious why Gold can benefit from this."

"If the US government succeeds in making the US Federal Reserve compliant, an excessively loose monetary policy and a significant rise in US inflation could be expected — both of which would make Gold more attractive as an investment. Just how far-reaching an attack on the independence of the central bank can be in extreme cases can be seen in the example of Turkey, where the inflation rate has been in double figures for more than five years, most recently reaching almost 40%, and the currency has subsequently lost massive amounts of value."

"The price of Gold fell again in the course of yesterday's trading and is down to $3,300 today, as Trump has since backtracked somewhat. What happens now? That depends, on the one hand, on whether Trump sticks to his verbal attacks or whether an early dismissal of Powell actually becomes more likely and, on the other, on how the Fed reacts to his comments at its next meeting on 7 May."