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Investing.com-- Gold prices rose in Asian trade on Tuesday as safe haven demand was buoyed by increased concerns over Federal Reserve independence after President Donald Trump said he was firing Governor Lisa Cook.
A drop in the dollar also benefited gold and broader metal prices, all of which were nursing choppy performances in recent sessions amid heightened uncertainty over the path of U.S. interest rates.
Spot gold rose 0.3% to $3,375.29 an ounce, while gold futures for October rose 0.2% to $3,423.95/oz by 00:24 ET (04:24 GMT). Spot prices briefly hit an over two-week high of $3,386.49/oz .
Trump says he will fire Fed’s Cook, sparking independence concerns
Trump said in a publicly released letter that he was calling for Cook’s immediate removal, claiming he had sufficient cause to do so over allegations of mortgage fraud against the Fed governor.
Cook rejected the allegations, stating that Trump had “no authority” to fire her and that she would stay on in her role.
The Cook firing is Trump’s latest attack on the Fed, and comes as the president seeks to gain more influence over the Fed’s rate-setting activities. Replacing Cook with his own nominee could give Trump greater influence in the Fed’s seven-member board, which currently includes two of his nominees– Governor Christopher Waller and Vice Chair for Supervision Michelle Bowman.
Waller and Bowman had both voted for a rate cut during the Fed’s July meeting, in line with Trump’s demands.
Trump had earlier raised the possibility of firing Fed Chair Jerome Powell, as the Fed chair largely dismissed calls to cut rates immediately. But Powell had relented somewhat last week, raising the possibility of a September cut amid some labor market weakness.
But he still remained largely non-committal towards further easing.
The president’s repeated attacks on the Fed sparked renewed concerns over the central bank’s independence, which stand to hurt U.S. economic credibility in the long run.
This in turn fueled safe haven buying in gold and other precious metals.
Metal prices benefit from softer dollar
Broader metal prices benefited from weakness in the dollar following Trump’s move, although the dollar index recovered back to levels above 98 points.
Spot platinum rose 0.1% to $1,346.40/oz, while spot silver rose 0.7% to $38.8525/oz. Both metals outpaced gold in recent months, as years of underperformance saw traders seek buying opportunities in other precious metals.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.7% to $9,848.85 a ton, while COMEX copper futures rose 0.4% to $4.550 a pound.
Industrial metals had rallied sharply last week as the Fed’s signaling of potential rate cuts boosted risk appetite. This trend had offered limited gains to gold and precious metals.