Gold prices reversed course in Asian trade on Wednesday, pulling back after Tuesday’s rally that was sparked by Donald Trump’s attempt to fire Federal Reserve Governor Lisa Cook.
Spot gold (XAU/USD) was trading at $3,380.60 an ounce by 08:50 GMT.
Trump’s late-Monday announcement that Cook should be removed immediately over alleged mortgage fraud initially sent gold higher, as investors sought a safe haven in the face of a potential legal fight and fresh questions over the Fed’s independence.
Cook has refused to resign and vowed to contest the dismissal in court, while the Fed itself has said Trump has no grounds to remove her.
That political storm lifted gold yesterday, but the momentum faded overnight as traders locked in profits and turned cautious ahead of key economic signals later this week.
Markets remain on edge over the implications of Trump reshaping the Fed’s rate-setting board. Replacing Cook with his own nominee could hand him a majority, making lower interest rates more likely.
While such a shift would be broadly supportive of gold, the immediate reaction shows investors are wary of betting too heavily before the outcome of the dispute becomes clear.