US dollar weakens as Trump-Powell feud continues

Gold and silver are seeing further gains this week as the US dollar weakens. The feud between President Trump and Federal Reserve Chairman Jerome Powell is causing market uncertainty.

The US dollar index has fallen 0.5% in the past five days as markets remain unsure whether the Fed will continue to hold US rates steady in the face of the President’s demands for steep cuts.

Gold has firmly passed $3,400 per ounce, hitting its highest level in just over a month, and up 2% in the past week. In GBP, gold is firmly above £2,500 per ounce once more, trading at a peak of £2,533 so far today. The weaker dollar has limited the gains in GBP to 1.4% for the week. Similarly in euros, gold is up 1.4%, passing €2,900 per ounce.

Silver is also building on its recent strength, and hit a near 14-year high in USD of $39.27 per ounce so far today. In GBP, gold hit a high of £29.13, inching closer to the UK record of £29.26. In euros, silver briefly hit a new all-time high of €33.61 per ounce, as the metal continues to build on its recent performance.

Markets were spooked recently on reports that President Trump was due to fire Powell for his perceived failure to cut rates at the desired pace. Stocks briefly dropped, and bond yields jumped before the President clarified he had no intention on sacking Powell, causing markets to recover. Caution remains however, and with Powell’s term as Chair up in March 2026 the President will have his chance to select a more dovish Fed Chair, one who may be more willing to cut rates at a much faster pace.

If Trump is successful in removing Powell or pressuring the Fed into cutting rates faster than markets agree with then the could be significant reaction in bond yields. Yields have already risen in many countries as national deficits rise, and bond vigilantes could target the US if they believe President Trump is overruling fiscally sound decisions and disrupting the independence of the Federal Reserve.

With the deadline for global tariffs (August 1st) and next Fed rate decision (30th July) now less than two weeks away, there is plenty of short-term potential for price volatility.