Gold price continues to build on its record rally, closing in on the $3,500 mark in Asian trading on Tuesday. Investors continue to flock to safety in the traditional store of value, the Gold price, amid no confidence in the US Dollar and Trump's attacks on Fed Chairman Powell.
ust as the US-China trade war-led US recession fears weren't enough to sap investors' confidence, US President Donald Trump doubled down on his criticism of Federal Reserve (Fed) Chairman Jerome Powell since last Friday, negatively impacting the already beleaguered US Dollar (USD), lifting the traditional safe-haven and the USD-denominated Gold price.
Trump continued his verbal attacks on Powell, raising concerns about the central bank's independence, prompting investors to show no confidence in the US currency. Trump noted on Monday that the US economy is headed for a slowdown "unless Mr. Too Late, a major loser, lowers interest rates NOW."
Responding to Trump's criticism, the Fed whisperer and Wall Street Journal's (WSJ) Nick Timiraos said, "Trump is signalling that he will blame the Federal Reserve for any economic weakness resulting from his trade war if the central bank doesn't cut interest rates soon. "In the process, he might also be seeking to delegitimize the historically independent institution in a way that could undermine its effectiveness," Nick added.
Despite the latest uptick in the US Dollar, this narrative remains a constant threat while rendering positive for the go-to safety bet – the Gold price.
Looking ahead, Gold price could see a brief correction as traders will likely cash in on their longs, positioning for the notable US earnings on the docket this week, including Magnificent Seven members Tesla and Alphabet, and a host of high-profile industrials such as Boeing etc.
However, any dip in Gold price could be seen as a good buying opportunity as the US-China trade war escalation and worries over the Fed's independence will continue to haunt markets.
Source; fxstreet
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