Gold (XAU/USD) prices edged lower in early European trade on Thursday, weighed down by improving risk appetite after U.S. President Donald Trump played down speculation over the dismissal of Federal Reserve Chair Jerome Powell.
Spot gold fell to $3,327 an ounce by 09:00 GMT, retreating from Wednesday’s spike to $3,377 after initial reports fuelled fears over Powell’s job security.
Gold had rallied after Bloomberg reported Trump was considering firing Powell amid frustration with the Fed’s reluctance to cut interest rates. But the mood cooled after Trump stated it was “highly unlikely” he would remove Powell, though he left the door open if fraud were discovered in the Fed’s ongoing building renovation project.
Trump’s attacks on Powell have intensified in recent weeks, backed by vocal support from Republican allies calling for the Fed Chair’s ousting. The president accused Powell of moving too slowly on rate cuts, claiming delayed action risks economic damage.
In contrast, Powell and key Fed officials have pushed back, signalling no imminent rate cuts as the central bank gauges the inflationary consequences of Trump’s sweeping trade tariffs.
Trump’s softer tone on Powell helped stabilise market sentiment, lifting equities and limiting near-term appetite for safe havens like gold. The dollar strengthened in response, holding near three-week highs following solid gains through the week.
Markets are now eyeing upcoming U.S. retail sales and jobless claims data for fresh signals on the economy. Meanwhile, the Fed is widely expected to keep interest rates steady at its next meeting, following hotter-than-expected inflation data earlier this week.
Still, gold remains supported by geopolitical risks and growing trade tensions, particularly with Trump’s newly announced tariffs on multiple key trade partners set to come into force within weeks. The yellow metal continues to trade within range, awaiting its next breakout trigger.