(Kitco Commentary) - Gold prices surged to unprecedented heights, breaking through the $3,400 barrier for the first time in history as market turbulence followed renewed criticism of Federal Reserve policy by President Donald Trump.
The most active June gold contract soared $92.20 (2.8%) on Monday, settling at $3,434 per troy ounce. The remarkable rally has seen gold climb more than $400 in just nine trading days, with today's gains driven primarily by increased buying pressure, accounting for approximately two-thirds of the advance.
The remaining third came from dollar weakness, as the U.S. dollar index fell 1.02% to 98.165.
Investors flocked to safe-haven assets, including gold and the Swiss franc, while U.S. Treasury yields rose amid market uncertainty. Major U.S. stock indices declined by over 3% as the president continued his verbal offensive against Federal Reserve Chairman Jerome Powell.
"The U.S. economy could slow unless interest rates are lowered immediately," Trump stated on Monday, echoing previous criticisms of Powell's monetary policy approach. This follows a series of attacks launched last Thursday, April 17, when Trump accused Powell of "playing politics" by refusing to cut interest rates.
In a post on Truth Social, Trump wrote: "With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW." The president also suggested he had the authority to remove Powell "real fast" and looked forward to the day when the Fed chairman would be gone.
The comments come in direct opposition to Powell's cautious stance expressed earlier this month. On April 4, in a speech to business journalists in Arlington, Virginia, Powell voiced concerns about Trump's tariff policies, stating that the Federal Reserve now faces a "highly uncertain outlook."
"We are well-positioned to wait for greater clarity before considering any adjustments to our policy stance," Powell said. "It is too soon to say what will be the appropriate path for monetary policy."
According to Reuters, Powell maintains that interest rates should not be lowered until there is more clarity on whether Trump's tariff plans might trigger a persistent surge in inflation.
As political tension and economic uncertainty continue to mount, gold's status as a premier safe-haven asset has been reinforced, propelling the precious metal to historic highs.
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