Terence Hove
Gold advanced on Tuesday, reaching a two-week high as investors sought refuge from renewed political uncertainty in Washington. The announced dismissal of Federal Reserve Governor Lisa Cook by President Donald Trump raised fears over central bank independence, amplifying safe-haven demand.
The move comes against a backdrop of shifting monetary policy expectations. Fed Chair Jerome Powell last week signaled that risks to the labor market were rising even as inflation pressures persisted, leaving open the prospect of a rate cut at the central bank’s September meeting. Futures markets now assign a strong probability to a quarter-point reduction. Traders will scrutinize Friday’s release of the PCE price index, the Fed’s preferred inflation gauge, for confirmation on the policy outlook. Persistent inflation could temper expectations of aggressive easing, limiting gold’s upside.
Investment flows continue to anchor the gold market as discussions in India about loosening pension fund restrictions could channel fresh inflows into the bullion. Central bank purchases, already robust this year, further reinforce structural support.
Geopolitical tensions add another layer of uncertainty. Airstrikes in Ukraine continued, while Western officials pressed for greater pressure on Moscow. Additionally, the lack of progress in peace talks continues to underpin safe-haven demand. In the Middle East, Israeli strikes in Gaza heightened concerns about a broader regional escalation. Such developments maintain a bid for defensive assets.
Hove Financial Markets Strategist Consultant to Exness
