Gold bullion climbed to fresh 5-week highs above US$3,400 per ounce overnight, trading at the upper end of its tight summer range as the US Dollar weakened following an unprecedented legal clash over the independence of the Federal Reserve.
The move came as Fed Governor Lisa Cook launched legal action against President Donald Trump to block his attempt to remove her from office. Cook’s attorney, Abbe Lowell, described the President’s move as “unlawful and void,” highlighting the intensifying battle over central bank autonomy.
With Trump repeatedly criticising Chair Jerome Powell for not cutting rates more aggressively, analysts are increasingly pointing to Fed independence as the key driver for precious metals. “You’ve had a number of bullish developments for gold over the past three months, and yet it’s remained rangebound,” noted Marcus Garvey of Macquarie. “That suggests the rally is running long in the tooth.”
Gold touched US$3,410 per ounce as US trading began Thursday, extending a consolidation band of US$200 that has kept the metal between US$3,250 and US$3,450 since June.
Silver also pushed higher, reclaiming US$39 per ounce, only 50 cents shy of July’s 14-year high.
Bond yields eased, with US 10-year Treasuries dipping below 4.25% for the first time in two weeks. US equities, meanwhile, opened flat at record highs on the S&P500, with tech heavyweight Nvidia sliding despite blockbuster earnings.
Despite the elevated prices, signs of speculative froth remain limited. “Far from there being any signs of mania, there is a distinct lack of participation from individual or institutional investors, aside from central banks,” said Chris Mahoney of Jupiter Asset Management.
ETF demand has been steady, with the world’s largest gold ETF (GLD) adding 0.6% yesterday. Futures markets, however, continue to show reduced activity, with Comex open interest falling to 18-month lows.
Gold in Europe also surged, hitting €2,920 per ounce, a 3-week high, while UK investors saw fresh all-time highs of £2,525. Both follow earlier records set in April during tariff tensions.
Meanwhile, US economic data was mixed. GDP growth for Q2 was revised higher to 3.3% annualised, while inflation (core PCE) was confirmed at 2.5%. Markets now await the July PCE release due Friday, coinciding with the traditional end of the US summer holiday season.
Gold remains firmly supported above US$3,250, with silver continuing to test multi-year highs. The political storm over the Fed’s independence adds fresh uncertainty to the outlook for US monetary policy, a backdrop that historically underpins demand for tangible, uncorrelated assets like gold and silver.
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