Gold (GC=F) prices moved higher Tuesday to trade near record levels after President Trump moved to oust Fed governor Lisa Cook late Monday over alleged mortgage fraud, raising fresh concerns about the central bank’s independence.
Wall Street sees the precious metal’s upward movement as far from over, especially if Cook, who has refused to step down, is replaced.
“We think the episode will add to growing global investor unease over Trump’s efforts to influence the independent central bank,” UBS chief investment officer Americas and Global Head of Equities Ulrike Hoffmann-Burchardi said.
Gold futures in New York gained 0.3% to hover near $3.427, roughly $100 away from record highs. Spot prices edged 0.4% higher to near $3,380, the highest level since Aug. 11.
Read more about gold prices and today’s market action.
The US dollar (DX-Y.NYB) also weakened slightly on Tuesday, while the 30-year bond (^TYX) edged higher.
“The US dollar, already set to weaken further over the next 12 months on Fed easing and fiscal concerns, could take another hit if Fed independence or credibility is eroded,” Hoffmann-Burchardi added.
A lower dollar would benefit gold and lower rates. UBS forecasts gold will rise to $3,700 by the end of June 2026.
Read more: How to invest in gold in 4 steps
Goldman Sachs sees an even more bullish scenario for the precious metal, noting in a deep dive earlier this year that a less independent Fed “could dent the appeal of the Dollar and USTs, but may make gold shine even brighter.”
Last week, analysts reaffirmed their $4,000 per troy ounce forecast for mid-2026, “driven by structurally strong central bank demand and ETF-inflows” supported by Fed easing.
There remains considerable uncertainty over Cook’s tenure on the board. Cook’s lawyer said Tuesday that they plan to file a suit to challenge Trump’s decision.
But if Cook is replaced on the board with another Trump appointment, Paul Wong, market strategist at Sprott, told Yahoo Finance on Tuesday that this would give the White House “de facto control of the Fed board.”
Another Trump appointee, Stephen Miran, is awaiting Senate approval to fill the Board of Governors seat left vacant by Adriana Kugler, who stepped down on Aug. 8.
“Loss of Fed independence, run-it-hot monetary and fiscal policy, inflation risks, weaker US dollar, it all sums up to eventually a higher gold price,” Wong added.
Gold futures are up 31% year to date, versus an S&P 500 (^GSPC) rise of more than 9% during the same time period.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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