The yellow metal recorded gains at the start of European trading today, Thursday, June 26, rising for the second consecutive session, supported by declines in the US dollar after reports indicated that President Trump is considering replacing Powell. This led to a rise in safe-haven currencies and assets, led by gold, which is trading up about 1.45% at $3,345 per ounce, while silver is trading at $36.38 per ounce, up 0.22%.
The Wall Street Journal reported that President Trump may announce the replacement of Jerome Powell by September or October, reviving market concerns about the independence of the US Federal Reserve, as Powell’s term is expected to end in May of next year. Therefore, rising expectations regarding his replacement are supporting demand for safe havens and causing strong declines in the US dollar. All the pressure President Trump is exerting on Federal Reserve Chairman Jerome Powell and the US Federal Reserve is regarding the failure to cut interest rates so far. Trump has criticized the Fed’s stance of holding interest rates steady more than once, suggesting the need for a rate cut. Powell indicated in his remarks before the Senate on Wednesday that Trump’s tariffs could cause a temporary spike in prices and that the Federal Reserve should remain cautious about any further rate cuts. This report and the rising expectations regarding Powell have raised market expectations for a rate cut during the remainder of the year. They now see a 66 basis point cut, compared to 51 points at the beginning of the week. Market expectations, according to the CME FedWatch tool for July, have now risen to a 25 basis point cut to 24%, after having been below expectations, putting pressure on the US dollar. The US Dollar Index lost about 0.70%, trading at 96.72, its lowest level since February 2022.
Platinum traded at $1,383, up about 2.12%, trading at its highest level since 2014, supported by rising concerns about a supply deficit. Palladium rose about 4.33%, trading at $1,103. Platinum and palladium are closely related, as they can be substituted for each other in autocatalysts. Therefore, palladium’s rise stemmed from the rise in platinum due to a supply deficit.