Gold prices retreated in Asian trading on Wednesday following a rally to a two-week peak, triggered by concerns over U.S. President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook, raising questions about the central bank’s independence.
The yellow metal initially jumped after Trump’s late-Monday announcement to immediately dismiss Cook over alleged mortgage fraud, which pushed the dollar lower and benefited metals.
However, the dollar regained its footing, and Treasury yields stabilized after both Cook and the Fed argued that Trump had no authority to carry out the firing. Spot gold fell 0.5% to $3,378.29 per ounce, while October gold futures slipped 0.1% to $3,428.70/oz by 00:23 ET (04:23 GMT).
Legal Battle Spurs Safe-Haven Buying
Traders sought refuge in gold as Cook vowed to contest her removal in court.
Cook declared she will not resign and intends to challenge her firing, asserting that Trump had no grounds for dismissal. The Fed echoed this view.
Trump’s action has stirred wider concerns about political interference at the Fed, which has traditionally operated independently. Earlier this year, Trump also threatened to fire Fed Chair Jerome Powell for not lowering rates further.
“Replacing Cook with his own nominee would give Trump a potential majority on the Fed’s seven-member rate-setting board, allowing him to pursue calls for lower interest rates,” analysts said.
Markets remain wary as the Fed has maintained a cautious approach to easing, citing inflationary risks from Trump’s tariffs. While Powell has hinted at the possibility of a September rate cut, he remains largely non-committal. Lower rates, however, tend to favor gold and other metals.
Dollar Rebounds, Metal Gains Moderate
The dollar index climbed above 98 points on Wednesday, recovering losses earlier in the week, while Treasury yields steadied after recent volatility.
This pressured broader metal prices. Spot platinum eased 0.1% to $1,353.71/oz, and spot silver dropped 0.3% to $38.5035/oz.
Industrial metals also moderated, with London Metal Exchange copper futures down 0.1% to $9,838.55 per ton and COMEX copper falling 0.5% to $4.5248 per pound. Both contracts had seen strong gains over the past week amid optimism over lower U.S. interest rates and potential stimulus measures from China.
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