The SPDR Gold Trust (GLD) ETF continued its strong surge as gold price soared to a record high on Monday. It soared to a high of $313 in the pre-market session, bringing the year-to-date gains to 30%. It has jumped in the last four consecutive months, the longest streak since last year.
Gold price has surged to a record high
The GLD ETF jumped on Monday as the price of gold continued its strong rally. Gold jumped to a high of $3,400, representing a significant increase from its trading price of $2,350 at the same period last year.
Gold has jumped after media reports confirmed that Donald Trump was studying ways to remove Jerome Powell from the Federal Reserve.
On Thursday, Trump expressed his frustrations from the Fed, arguing that he was always late when hiking and cutting interest rates. He blamed him for the inflation that happened after the pandemic, and for not cutting rates fast enough.
In a separate statement, Kevin Hassett, a senior economic official at Trump’s White House, confirmed that the president was studying whether he could remove the Fed Chair.
Analysts believe that the president will attempt to do that since he is in the process of applying substantial executive power in this term. He has even fired several officials like inspector generals who are normally protected by law.
Jerome Powell believes that his job is safe because he has not done anything wrong to be fired. And if he were fired, there a chance that the Supreme Court would reinstate him as the Fed Chair. This explains why PolyMarket odds that Trump will remove Powell as chair have dropped to 18% from last week’s high of 22%.
The GLD ETF has also soared after Donald Trump’s tariffs earlier this month. These tariffs will further isolate the US.
Why Trump’s firing of Powell would be bullish for gold price
If Trump fires Powell and the Supreme Court allows it, it would benefit gold and hurt the US dollar greatly.
It would benefit gold because of its role as a safe-haven asset. Gold has a long heritage as a safe haven, which explains why central banks and most institutional investors have accumulated it in the past few years.
Gold would do well as Powell’s firing would ensure that all other presidents have a chance to replace a Fed official who keeps rates higher for longer.
History shows that the currencies of countries without a central bank independence don’t do well. A good example of this is the Turkish lir, which has plunged to a record low after President Erdogan removed the guardrails that protected the central bank governor from political interference.
Fears that Trump will fire the Fed Chair explains why the US dollar index continued plunging, reaching a low of $98, down by 11% from its highest level this year. It has crashed to its lowest point since March 2022.
Analysts believe that central banks and other institutions will continue dumping the US dollar and US government bonds.
GLD ETF stock price analysis
The weekly chart indicates that the GLD ETF has continued to soar in the past few months. It has remained above the 50-week and 100-week moving averages, a sign that its trend is gaining steam.
The SPDR Gold Trust ETF’s oscillators have continued soaring. The Relative Strength Index (RSI) has moved to the extreme overbought point at 80. Also, the Awesome Oscillator has moved above the zero line.
Additionally, the Percentage Price Oscillator (PPO), a widely used momentum indicator, has continued to rise this year. Therefore, the GLD ETF will likely continue rising as bulls target the psychological point at $350. A drop below the support at $280 will invalidate the bullish outlook.
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