Gold fell over 4% as markets braced for President Donald Trump’s announcement of the next US Federal Reserve chair.
Investors fear a more hawkish policy stance, even as the Fed recently held rates steady amid divided votes.
Kevin Warsh is widely seen as the leading contender, with the dollar strengthening on the speculation.
Gold Slumps as Markets Brace for Trump’s Pick for Next Fed Chair; Who’s Next in Line
Gold retreats sharply as investors weigh the risk of a more hawkish Fed under Trump’s next pick
Donald Trump and Jerome Powell Wikimedia commons
Summary
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Gold slumped more than 4% on Friday as market participants braced for the announcement of the next chair of the US Federal Reserve. The sharp fall in the safe-haven asset signals investor caution amid fears that President Donald Trump’s pick could take a more hawkish stance on monetary policy.
The yellow metal had been on track for its strongest monthly gain since 1982, rising over 20% in January.
Trump said on Thursday that he intends to announce the next Fed chair on Friday, who will replace Jerome Powell. “I’ll be announcing the Fed chair tomorrow morning,” Trump said. Asked whether he had finalised his choice, he added, “I do. I better, otherwise I have to go to work very quickly.”
Powell and Trump have had a long-standing tussle over interest rates, with the Federal Reserve holding firm on its decision not to cut the federal funds rate aggressively. The Trump administration has repeatedly blamed high interest rates for weighing on economic growth.
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The Federal Open Market Committee’s January policy decision maintained the status quo on benchmark lending rates at 3.50–3.75%. However, the voting pattern showed divergence, with two of the 12 members calling for a 25 basis-point rate cut. Powell did not rule out further easing, with markets now pricing in a cumulative 50-bps cut in 2026.
“We continue to expect three cuts in 2026, driven by expectations of further labour market weakness,” Gaura Sen Gupta, Chief Economist at IDFC First Bank, said.
Kevin Warsh Seen as Front-Runner
Market speculation and media reports suggest that Kevin Warsh, a former Federal Reserve Board governor, is the leading contender for the role. Trump hinted to reporters on Thursday that “a lot of people think that this is somebody that could have been there a few years ago,” reinforcing the speculation. Warsh was previously considered for the Fed chair position in 2017.
According to a Financial Times report citing sources, Trump is preparing to nominate Warsh.
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Amid speculation over Warsh’s potential appointment, the dollar index—which measures the greenback against a basket of six major currencies—rose 0.4%. The Fed chair is one of the most influential positions in the US government, with decisions that often move global financial markets.
