HG MARKETS:

Gold prices slipped during Asian trading on Wednesday, retreating from a more than two-week high as political tensions in the U.S. surrounding the Federal Reserve triggered market volatility. The decline followed a sharp rally sparked by President Donald Trump’s abrupt attempt to dismiss Fed Governor Lisa Cook, raising alarm over the central bank’s independence.

The yellow metal surged initially after Trump’s unexpected Monday night statement demanding Cook’s immediate removal over mortgage fraud allegations. This move shook investor confidence, pushing the U.S. dollar lower and lifting gold and other metal prices. However, as Cook pushed back and the Fed insisted Trump lacked the authority to remove her, market jitters began to ease.

As a result, the dollar rebounded and Treasury yields stabilized, reducing demand for gold. October gold futures edged down 0.1% to $3,428.70 as of early Wednesday trading. The early-week gains had largely been driven by safe-haven buying in anticipation of a prolonged legal and political standoff between Trump and the Fed.

The conflict has intensified fears of political interference in the traditionally independent U.S. central bank. Trump’s ongoing criticism of the Fed’s cautious stance on rate cuts — and his previous threats toward Chair Jerome Powell — suggest a broader strategy to influence monetary policy. If successful in replacing Cook with a loyal appointee, Trump could tilt the balance of the Fed’s rate-setting board in favor of looser policy.

The Federal Reserve may consider a rate cut in September, but Chair Jerome Powell remains cautious due to inflation concerns from earlier tariffs. Despite his hesitance, the prospect of lower rates is supporting gold, which investors see as a hedge, helping the metal maintain strong long-term support.