Gold prices extend gains as dollar sags after Donald Trump remarks

Kenny Grant
August 22, 2018

Critical comments by US President Donald Trump about the country's central bank have held back some stocks while the US dollar fell for the fourth consecutive day in its worst spell since March. But Trump has repeatedly lashed out at Fed Chairman Jerome Powell. Trump said to Reuters about Powell.

"He's done this before. he's a bit of a critic of the tightening of interest rates".

"While Trump's displeasure for rising interest rates is nothing new, and the Fed maintains full operational independence, markets remain attentive to such comments", wrote strategists at ANZ.

The Fed has raised rates twice this year and is expected to do so again next month.

"It's likely that in either December or March the Fed will pause the rate hikes, not because of Trump's pressure but because it would be the right thing to do, with the funds rate approaching neutral and still likely no inflation threat", said Cornerstone Macro economist Roberto Perli.

The Federal Reserve operates independently of the government, as it is sometimes compelled to make interest-rate decisions that are meant to be good for the economy in the long run but that may be politically unpopular.

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FILE PHOTO: U.S. President Donald Trump looks on as Jerome Powell, his nominee to become chairman of the U.S. Federal Reserve, speaks at the White House in Washington, U.S., November 2, 2017.

"Most Fed-watchers are of the view that Powell is emphasising the need for financial stability and with a positive USA economic backdrop is obliged to tighten policy".

"The Fed keeps calling for raising rates in a return to "normalcy.' I would argue, with all of the central bank intervention, here and overseas, that there was been no 'normalcy" for nearly a decade".

Presidents usually avoid criticizing the central bank, which is created to be independent from political interference.

"I think the Fed understands what its role is, and its role is to be an independent body. The other countries are accommodated". Typically, the greatest influence a president has over the Fed is the appointment of governors. "I'll let you know in seven years".

FILE PHOTO: A security guard patrols the Federal Reserve building in Washington, DC, U.S., July 16, 2018. He said the Fed was designed so that it would be accountable to policy makers and the public, but it was also created to be somewhat independent from jawboning from the White House.

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