💥 Gold Prices Reverse as Trump-Powell Drama Fizzles – What’s Next for XAU/USD?
🔄 Rumor Rally Crashes Back to Reality
On Wednesday, gold (XAU/USD) soared over 2% in just hours, fueled by speculation that Trump was preparing to oust Powell if re-elected. The possibility of sudden changes in Federal Reserve leadership sent shockwaves through the market. Investors hate uncertainty — and nothing screams “market chaos” like meddling with central bank independence.
But by Thursday morning, the narrative shifted. The rumor lost steam. Trump’s team backtracked, and gold gave back most of its gains — sliding 1.5% to $3,320.
"Buy the rumor, sell the fact" played out in real time.
💵 Dollar Strength Weighs Heavily on Gold
Adding to gold’s sudden drop was the stronger U.S. dollar. As the USD gained strength, gold — typically priced in dollars — became more expensive for foreign buyers, leading to less demand.
With no major geopolitical tension or economic crisis in play, gold’s safe-haven appeal weakened. Traders who jumped in on political headlines were quick to take profits and step back.
📅 What’s Next? Retail Sales & Jobless Claims in Focus
Now, attention shifts to actual economic data. This Thursday’s releases — U.S. retail sales and weekly jobless claims — could drive the next move in gold.
If the data shows signs of a cooling economy, it might fuel rate cut expectations, which is typically bullish for gold. Conversely, stronger numbers could push gold even lower, especially if the Fed sticks to its current stance of holding rates steady until at least September.
Analysts expect the Fed to hold rates at the upcoming July 29-30 meeting, with a possible rate cut on the table in September if data justifies it.
📈 Year-To-Date: Gold Still Shines
Despite the rollercoaster ride, gold is still up around 25% in 2025, putting it almost neck-and-neck with Bitcoin’s 26% rise. Whether this rally continues depends on a mix of upcoming economic reports, Fed commentary, and any renewed political drama.