By Ishaan Arora
(Reuters) – Gold prices climbed to a more than two-week high on Tuesday, after U.S. President Donald Trump said he was removing Federal Reserve Governor Lisa Cook, a move seen by many as eroding the central bank’s independence and undermining confidence in U.S. assets.
Spot gold was up 0.4% at $3,379.05 per ounce, as of 0803 GMT, after hitting its highest level since August 11 earlier in the session.
U.S. gold futures for December delivery rose 0.3% to $3,425.80.
Trump on Monday took the unprecedented action of firing Cook over mortgage borrowing impropriety claims.
“Investors are seeing Trump’s move as a try to secure a dovish majority in Fed’s members … putting at risk the Fed’s independence and adding uncertainty into the markets, with the result (being) that investors are buying gold,” said Carlo Alberto De Casa, an external analyst at Swissquote.
Non-yielding bullion tends to do well in a low-interest rate environment and in time of economic uncertainty.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.18% to 958.49 metric tons on Monday from 956.77 tons on Friday. [GOL/ETF]
On Friday, Fed Chair Jerome Powell signalled a possible rate cut at the Fed’s meeting next month, saying that risks to the job market were rising but inflation remained a threat, and that a decision wasn’t set in stone.
“Markets are pricing a 25 bps rate cut (in September). A jumbo cut would help gold further, but I don’t see this as a likely scenario as Fed’s members (may be) worried by the labour market slowdown, but they are still considering inflation risks,” De Casa added.
Investors are now looking to the Personal Consumption Expenditures Price Index, the Fed’s preferred inflation gauge, due on Friday, for more cues on the central bank’s monetary policy path.
Elsewhere, spot silver rose 0.4% to $38.71 per ounce, platinum eased 0.4% to $1,336.66 and palladium climbed 0.7% to $1,093.50.
(Reporting by Ishaan Arora in Bengaluru; Editing by Janane Venkatraman)
