Trump's Fed challenge 'playing with fire,' adding to gold's safe haven appeal

[stack of shiny gold bars 3d illustration]
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Gold futures closed modestly higher Wednesday, reversing losses incurred earlier in the session, as concerns about the Federal Reserve's independence lingered after President Trump tried to fire Federal Reserve Governor Lisa Cook.

Gold has posted back-to-back gains on the combination of Fed Chair Powell's opening the door to a September rate cut in last Friday's Jackson Hole speech and Trump's move to oust Cook from the Fed, with increasing concerns over Trump's respect for the Fed's independence boosting safe-haven demand for gold, SP Angel said in a note.

"When you start to erode faith in monetary policy for the world's reserve currency, you are playing with fire," James St. Aubin, chief investment officer of Ocean Park Asset Management, said in an interview. "If the market believes the Fed is making policy in reaction to direct political influence, U.S. assets will become less attractive."

While the legal process around Cook's attempted ouster may last for months, analysts generally see persistent geopolitical risk, such as Ukraine's stepped-up strikes on Russian energy infrastructure, and trade tensions, with markets more convinced that a new U.S. tariff wave could sap global strength, likely keeping a durable risk premium priced into gold.

Front-month Comex gold (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]) for August delivery closed +0.5% to $3,404.60/oz, its highest settlement value since August 8, and front-month August Comex silver ended +0.3% to $38.689/oz.

ETFs: (NYSEARCA:GLD [https://seekingalpha.com/symbol/GLD]), (NYSEARCA:GDX [https://seekingalpha.com/symbol/GDX]), (GDXJ [https://seekingalpha.com/symbol/GDXJ]), (NYSEARCA:IAU [https://seekingalpha.com/symbol/IAU]), (NYSEARCA:NUGT [https://seekingalpha.com/symbol/NUGT]), (PHYS [https://seekingalpha.com/symbol/PHYS]), (GLDM [https://seekingalpha.com/symbol/GLDM]), (AAAU [https://seekingalpha.com/symbol/AAAU]), (SGOL [https://seekingalpha.com/symbol/SGOL]), (RING [https://seekingalpha.com/symbol/RING]), (BAR [https://seekingalpha.com/symbol/BAR]), (OUNZ [https://seekingalpha.com/symbol/OUNZ]), (SLV [https://seekingalpha.com/symbol/SLV]), (PSLV [https://seekingalpha.com/symbol/PSLV]), (SIVR [https://seekingalpha.com/symbol/SIVR]), (SIL [https://seekingalpha.com/symbol/SIL]), (SILJ [https://seekingalpha.com/symbol/SILJ])

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