Gold prices eased in Asian trading on Wednesday following a rally that had pushed the metal to a more than two-week high. Investor jitters over U.S. President Donald Trump’s attempt to dismiss Federal Reserve Governor Lisa Cook renewed concerns about the central bank’s independence.
The initial surge in gold came after Trump’s late-Monday announcement to remove Cook immediately, citing allegations of mortgage fraud. The move caused the dollar to weaken, boosting gold and other metals.
However, the greenback regained ground, and Treasury yields stabilized after both Cook and the Fed asserted that Trump lacked authority to enact the firing. Spot gold fell 0.5% to $3,378.29 per ounce, while October gold futures dipped 0.1% to $3,428.70/oz by 00:23 ET (04:23 GMT).
Safe-Haven Demand Boosts Gold Amid Legal Standoff
Gold’s rally this week was fueled by safe-haven buying amid a potential legal showdown between Trump and Cook.
Cook has stated she will not resign and plans to challenge her removal in court, arguing the president had no valid grounds. The Fed has echoed this position.
Trump’s attempt to replace Cook raised broader concerns about political interference at the Fed, which traditionally operates independently. Earlier this year, Trump also threatened to dismiss Chair Jerome Powell, criticizing him for not cutting interest rates more aggressively.
“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 noted.
This has unsettled markets, as the Fed has maintained a cautious stance on further easing, highlighting potential inflationary risks from Trump’s tariff policies. While Powell has signaled some openness to a September rate cut, he has largely remained non-committal. Lower interest rates, however, tend to benefit gold and other precious metals.
Dollar Rebounds, Metals Pull Back
The dollar index climbed above 98 points on Wednesday, recovering earlier losses, while Treasury yields steadied following sharp rises earlier this week.
Stronger greenback dynamics weighed on broader metal prices. Spot platinum dropped 0.1% to $1,353.71/oz, and spot silver fell 0.3% to $38.5035/oz.
Among industrial metals, London Metal Exchange copper futures slipped 0.1% to $9,838.55 per ton, while COMEX copper fell 0.5% to $4.5248 per pound. Both contracts had surged last week on optimism over lower U.S. interest rates and expectations of additional stimulus from China.
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