At 13:01 GMT, XAU/USD is trading $3372.01, up $6.29 or +0.19%.

Trump’s Fed Pressure Triggers Safe-Haven Inflows into Gold

The dismissal is widely seen as a political maneuver aimed at steering the Fed toward a more dovish stance. Analysts, including Swissquote’s Carlo Alberto De Casa, warned that this introduces deeper uncertainty around the Fed’s credibility and decision-making autonomy—conditions historically supportive of gold.

Bond markets also reacted sharply. The 2-year Treasury yield dropped 3 bps to 3.70%, while the 10-year yield held around 4.279% and the 30-year yield rose to 4.916%, steepening the yield curve. Traders are now betting on lower short-term rates but pricing in longer-term inflation risk, both favorable for non-yielding gold.

Fed Rate Cut Odds and Inflation Data in Focus

Adding to the bullish gold narrative, Fed Chair Jerome Powell hinted at a potential rate cut in September, citing softening labor market indicators, even as inflation remains a concern. Money markets are now pricing in an 82% chance of a 25 bps cut.

Investors are eyeing this Friday’s PCE price index data—seen as the Fed’s preferred inflation gauge—for confirmation. A cooler reading could solidify the rate-cut narrative and strengthen gold’s upside.

China’s Gold Demand Rebounds Sharply

On the demand side, China’s net gold imports via Hong Kong jumped 126.81% in July compared to June, according to Hong Kong Census data. This marked a major rebound in physical demand, offering further support to bullion.