Gold prices rallied in European trade on Tuesday and expanded the gains for the second straight session, hitting a fresh record high and trading above $3500 for the first time in history.

The gains come amid current weakness for the dollar, which is impacted by a loss of confidence in US assets due to constant attacks by US President Trump against Fed Chair Powell.

Prices

Gold prices rose 2.2% today to $3500 an ounce, a record high, with a session-low at $3412.

On Monday, gold ros 2.9%, the third profit in four days amid concerns about the independence of the Federal Reserve.

US Dollar

The dollar index fell 0.3% on Tuesday on track for the third straight session, and is about to hit three-year lows at 97.92 against a basket of major rivals.

Trump escalated his attacks against Fed Chair Jerome Powell and called him “a big loser” and “Mr Too late”, and demanded the Fed once more to cut interest rates.

The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.

Such news continues to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.

Chicago Fed President Austin Goolsbey said he hopes the US won’t turn into an environment where the Fed’s ability to set monetary policies independently from political pressure is undermined.

According to the Fedwatch tool, the odds of a May Fed 0.25% rate cut stood at 12%.

The odds of such a cut in June stood at 70%.

SPDR

Gold holdings at the SPDR Gold Trust remained unchanged yesterday at 952.29 tons.

The euro rose in European trade on Tuesday on track for the third straight profit against the dollar, while trading near four-year highs as the dollar weakens after US President Trump’s constant attacks against Fed Chair Jerome Powell.

Now investors await European Central Bank President Christine Lagarde’s remarks for more clues on the future path of European interest rates.

The Price

The EUR/USD price rose 0.25% today to $1.1541, with a session-low at $1.1481.

The euro rose 1.1% on Monday against the dollar, the second profit in a row amid a loss of confidence in the dollar.

US Dollar

The dollar index fell 0.2% on Tuesday on track for the third straight session, and is about to hit three-year lows at 97.92 against a basket of major rivals.

A New Attack

Trump called Powell “big loser” and “Mr Too late”, and called on him and the Fed once more to cut interest rates.

The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.

Such news continues to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.

Lagarde

ECB President Christine Lagarde is scheduled to speak to CNBC later today and discuss the latest developments in the eurozone and the US tariff crisis.

Last week, Lagarde said that tariffs represent a shock, but their impact on inflation remains unclear.

She said the picture might not become clear by the next policy meeting in June, as the 90-day pause on tariffs would still be in place by then.

European Rates

Reports showed that some ECB officials see a high probability of a rate cut in June.

Markets are pricing in a 60% chance of an ECB rate cut in June.

The yen rose in Asian trade on Tuesday against major rivals, extending gains for the third straight session against the dollar, and hitting a fresh seven-month high, while about to trade above 140 yen per dollar for the first time this year on haven demand.

US President Donald Trump continued his attack on Fed Chair Powell and demanded an urgent interest rate cut, while publicly considering ways to fire Powell and restructure the central bank.

The Price

The USD/JPY price fell 0.55% today to 140.09, the lowest since September 2024, with a session-high at 141.17.

The yen rose 0.9% against the dollar on Monday, the second profit in a row on concerns about the Fed’s independence. 

A New Attack

Trump called Powell “big loser” and “Mr Too late”, and called on him and the Fed once more to cut interest rates.

The White House said it’s considering ways to fire Fed Chair Jerome Powell after Trump expressed urgent desires to terminate him due to disagreements about monetary policies.

Such news continues to rattle the markets, which depend heavily on the independence of the Federal Reserve from any political interference as a pivotal mainstay in the global financial system.

Bank of Japan

The Bank of Japan is widely expected to maintain interest rates unchanged at the 30-April meeting, and will likely note that new US tariffs won’t hurt the cycle of higher wages and inflation, necessary for rate hikes.

Gold rallied to fresh record highs on Monday past $3400 for the first time in its history, as the dollar weakened and concerns about the economic impact of the US-China trade war grew, sending investors towards safe havens.

Spot gold prices rose 2.6% to $2415 an ounce as of 10:46 GMT, ith a record high at $3424.

Dollar’s Weakness Underpins Gold

The US dollar weakened sharply after fresh criticism by Trump towards Fed Chair Jerome Powell, hurting investors confidence, and in turn underpinning gold prices.

As tariff jitters and doubts about the stability of the US financial status grow, the haven demand on gold is likely to surge as well.

Gold surges over $700 in 2025

Gold is up over $700 so far this year, managing to pass $3300 on Wednesday and then adding $100 in a few days.

Several analysts expect the gold’s rally to peter out pretty soon with a likely peak rapidly approaching.

Minerals Market: Gold Leads

Silver rose 0.2% to $32.66 an ounce.

Platinum rose 1% to $957.15. 

Palladium fell 3% to $934.34.

Powell Rattles the Markets

Fed Chair Jerome Powell warned last week that US tariffs could slow down growth and lead to higher prices for consumers, after chaos engulfed the financial markets.

Gold has thus become the final haven for many investors and the most bought asset in the world in a very short amount of time.

Historic Similarity 

Analysts compared gold’s rally this year to the rally that happened during the Iranian Revolution in the late seventies, when prices surged by 120% between November 1979 and January 1980.

Gold passed $3000 for the first time ever last month amid concerns about the global trade war and as a  haven against inflation.

Trump’s Tariffs 

The Trump administration imposed upwards of 245% tariffs on Chinese imports, while imposing 10% base tariffs on all other countries around the world.

Trump said the aim is to bring manufacturing back to America and collect billions of dollars from tariffs, reducing the pressure on income taxes.

Factors Behind Gold’s Rise:

1- A weaker Dollar

The dollar index hit three-year loss amid rising risks with investors fleeing US assets while the Fed heads towards monetary easing measures.

A stronger euro also impacted the dollar, which in turn boosted gold prices.

2- Geopolitical risks, due to Trump’s aggressive tariff policies and unpredictable moves.

3- Stagflation Concerns 

Investors are increasing concerns about a devastating combination between stagnation and inflation in upcoming months.

4- Lower Interest Rates

As global central banks cut interest rates worldwide, gold’s attractiveness is boosted compared to yielding assets.

5- Increasing purchases by global central banks.

6- A rebound in Exchange-Traded Funds based on gold, chief of which is the SPDR Gold Trust, the world’s  biggest.

Risks 

Gold is still burdened by the US 10-year treasury yield, which is standing at 2.15%, the highest since September 2023.

Despite the Fed starting the cycle of rate cuts, real yields continued to be stubborn, which weighs on gold prices.