Gold Price Swings Wildly on Fed Chair Uncertainty and Mixed Inflation Signals

Gold prices surged and sank in rapid succession on Wednesday as speculation around Federal Reserve Chair Jerome Powell’s potential dismissal sparked intense volatility in precious metals markets. In just two hours, gold (XAU/USD) traded in a dramatic $60 range, highlighting investors’ heightened sensitivity to political and monetary policy risks.

Market Whiplash as Trump Mulls Powell’s Removal

The sharp moves began when reports surfaced suggesting President Donald Trump had privately asked lawmakers whether they would support the removal of Fed Chair Jerome Powell. The news immediately sent gold prices soaring, as traders rushed into the safe-haven asset amid fears of central bank instability. However, the rally was short-lived.

Within hours, Trump publicly downplayed the reports, saying he was “not looking to remove anyone.” The clarification led to a sharp reversal in gold’s gains, reinforcing the market’s fragile sentiment.

Adding to the uncertainty is the legal ambiguity surrounding the president’s power to dismiss a sitting Fed chair—a question that further fueled safe-haven demand during the height of the panic.

Inflation Data Adds Complexity

The Fed speculation came on the heels of mixed U.S. inflation data. The Producer Price Index (PPI) for June came in flat, missing expectations of a 0.2% monthly gain. Core PPI, which excludes food and energy, also showed no change.

Meanwhile, the Consumer Price Index (CPI) released a day earlier revealed a 2.7% annualized rise in June, up from 2.4% in May. The data painted a murky picture for inflation expectations, complicating the Federal Reserve’s policy outlook and further contributing to market uncertainty.

Initially, gold dipped on the weaker-than-expected PPI report, falling about $15 from its opening price. But around 10:00 AM ET, headlines about Trump considering Powell’s dismissal triggered a swift reversal, sending gold to an intraday high of $3,385.

As of the market close, gold had settled at $3,359.10, up $22.40 on the day—recovering some of its early losses but well below the session high.

U.S. Dollar Slides, Lends Support to Gold

The U.S. dollar also mirrored gold’s erratic moves. The ICE U.S. Dollar Index (DXY) dipped to a session low of 97.74 following the Powell headlines, before partially recovering after Trump’s comments. The index ultimately closed at 98.24, down 0.38 points, providing tailwinds for gold by lowering its relative cost for foreign investors.

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