Gold pares gains after Trump shoots down talk of firing Powell

Gold prices jumped on Wednesday following news reports that U.S. President Donald Trump planned to fire Federal Reserve Chair Jerome Powell, but trimmed gains after Trump denied the claim.

The New York Times said the president drafted a letter firing Powell and had shown it to Republican members of the House of Representatives in an Oval Office meeting Tuesday.

At the White House Wednesday, Trump said he was not planning to fire Powell, but declined to rule anything out, citing an investigation into cost overruns on a $2.5-billion Fed headquarters renovation project.

Spot gold rose 0.9% to $3,352.49 per ounce after rising as much as 1.5% earlier.

U.S. gold futures were up 0.7% at $3,360.80.

“Headlines suggesting Trump was considering firing Powell drove gold prices higher ... He later clarified it’s highly unlikely. Gold markets were whipsawed by the back and forth,” said Daniel Ghali, commodity strategist at TD Securities.

Also helping boost precious metal prices were Israeli airstrikes on Damascus, Syria that damaged the Defence Ministry and struck near the presidential palace. The attack added to geopolitical worries and supported purchases of safe-haven gold.

In trade matters, the European Commission prepared to target $84 billion worth of U.S. goods for possible tariffs if trade talks with Washington fail after Trump threatened last week to impose 30% tariffs on imports from the European Union. The commission is the executive arm of the EU.

“With Israeli strikes and the U.S. being more hawkish on trade tariffs, there is a little bit more uncertainty to the marketplace,” which is helping gold, said Jim Wyckoff, a senior analyst at Kitco Metals. “I expect gold to trade between $3,250 and $3,476 in the near term.”

Further adding support to gold was data that showed U.S. producer prices were unexpectedly unchanged in June after a 0.3% rise in May. It followed Tuesday’s data that showed consumer prices rose 0.3% in June, up from 0.1% in May, which was interpreted by Wall Street as meaning the Federal Reserve may continue to exercise caution before cutting interest rates.

Gold thrives during uncertain times, and a low-interest rate environment boosts it further.

Spot silver edged 0.4% higher on Wednesday to $37.85 per ounce. Platinum gained 2.9% to $1,411.64 and palladium rose 1.7% to $1,227.21.

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