Nairobi, Kenya – Global financial markets were rocked Tuesday after gold surged to a fresh record and the US dollar weakened, as escalating tensions between US President Donald Trump and Federal Reserve Chair Jerome Powell heightened fears over the independence of the world’s most influential central bank.
Investors fled US assets amid growing concern that Trump may attempt to remove Powell, following a series of sharp public attacks on the Fed chief over interest rate policy and inflation warnings linked to sweeping US tariffs.
Market jitters deepen
The uncertainty triggered a renewed “sell America” trade, with Wall Street’s three main indexes tumbling about 2.5 percent on Monday. Analysts said the confrontation has shaken confidence in US economic stability and policymaking.
Trump intensified his criticism by urging pre-emptive rate cuts and labeling Powell a “major loser” and “Mr Too Late.” On his Truth Social platform, he claimed inflation was “virtually” nonexistent, citing falling food and energy prices and pointing to rate cuts by the European Central Bank.
The remarks followed Powell’s warning that tariffs could reignite inflation, putting the Fed at odds with the White House.
Safe-haven rush pushes gold past $3,500
As anxiety spread across markets, investors sought refuge in safe-haven assets. Gold climbed above $3,500 per ounce for the first time, while the US dollar remained under pressure against major currencies.
Oil prices edged higher, with Brent crude rising to $66.95 per barrel and West Texas Intermediate reaching $63.78.
Global equities mixed
Key Currency and Commodity Snapshot (0715 GMT)
| Instrument | Value | Change |
|---|---|---|
| Euro / US Dollar | $1.1500 | — |
| Pound / US Dollar | $1.3389 | — |
| US Dollar / Yen | ¥140.38 | — |
| WTI Crude | $63.78 | +1.1% |
| Brent Crude | $66.95 | +1.0% |
Fears over Fed independence
Market strategists cautioned that undermining the Fed’s independence could unleash extreme volatility and erode trust in the US financial system.
Some warned of a potential mass selloff of US equities and Treasuries, a sharp dollar decline, and broader disruption to the global financial architecture if the central bank’s autonomy is perceived to be under threat.
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