Dollar Weakens Further as Trump’s Clash with Fed Sparks Market Turmoil; Gold Surges Past $3,500 in Flight from U.S. Assets

The US dollar plunged at its lowest level in three years on Monday, deepening a slide that disrupted the world markets and sent investors to blur for safer assets, in particular gold, which exceeded $ 3,500 for the first time in history.

The Ice US Dollar index, a reference that measures the force of the greenback against a basket of six large currencies, fell to 97.92 before settling slightly more at 98.38 by the Midi Trade. This has marked its lowest level since March 2022, according to Factseet data.

The sharp drop in the dollar comes in the intensification of concerns concerning the open confrontation of President Donald Trump with the federal reserve. Investors were shaken after Trump renewed his attacks against the president of the Fed, Jerome Powell, calling him “too late” and “a major loser” in an article on Truth Social. The pursuit of the president of independence of the Central Bank, combined with the efforts reported by the White House officials to explore the legality of the elimination of Powell, created a crisis of confidence among investors and market players.

“We see a clear signal of the market that it does not even like the idea that the president could try to withdraw the Fed chair,” said Krishna Guha, Vice-President of Evercore Isii, during an appearance on Squawk Box of CNBC on Monday. “There has been a certain loss of confidence in the development of American economic policies in recent weeks. We have seen that in this very strange combination of upward pressure sometimes on long-term bond yields combined with a lower dollar. This suggests that global investors withdraw capital from the United States”

The political rupture has prompted global investors to reassess their exposure to American assets, triggering an exodus that has accelerated in recent weeks. Business leaders are increasingly expressing concern that the current trajectory sends all the bad signals concerning economic stability and institutional coherence of America.

“Gold is not just any merchandise, it is money,” said Peter Schiff, chief economist and global strategist at Euro Pacific Capital. “In normal circumstances, gold does not move as it is now. It is already up $ 58 tonight [Monday]merchant above $ 3,483. It is the end of the domination of the US dollar. Life in America is about to change in a way that few can imagine. »»

The gold gathering, long considered a refuge during economic uncertainty, was dramatic. The cash prices violated the brand of $ 3,500 per ounce early Tuesday, against $ 2,623 at the start of the year. Analysts now believe that metal could exceed $ 4,000 in the coming weeks, noting the pace to which it broke the $ 3,000 barrier was already unprecedented.

Historically, during periods of market disorders, investors turned to US dollars and treasury bills. But this time, with Washington himself at the center of the storm, many abandon traditional paradise in favor of gold and other non-American active. The weakness of the dollar has been accompanied by clear drops in the main stock market indices, the Wall Street continuing to bleed.

On Monday, the industrial average of Dow Jones fell by almost 1,000 points – a decrease of 2.5% – by making one of the worst day in recent months. The index is now on the right track to record its worst performance in April since 1932, deepening the anxieties that the political conflict in Washington is evolving towards a wider financial crisis.

Other major currencies have greatly won against the dollar. The euro increased by 1.3%, while the Japanese yen and the Swiss franc increased as the traders moved to relax. Treasury yields also fell as the prices increased, reflecting the demand for increasing state obligations, even if questions swirl on the long -term credibility of American budgetary and monetary policy.

Andy Laperriere, head of American policy at Piper Sandler, warned customers in a note that the president’s behavior could continue to hike.

“We are examining a determined president to upset Washington,” wrote Laperriere. “Investors who have ignored Trump’s own words proclaiming higher rates have been poorly served.

While Trump supporters argue that the president simply puts pressure for responsibility and better economic results, the markets react to what seems to be an erosion of institutional railings. The Fed, traditionally an apolitical actor responsible for safeguarding monetary stability, has now been trained in a battle that could redefine its role.

Thus, the decline of the dollar, the record rally in gold and the red ink on the stock markets suggest that investors are preparing for more instability in the coming weeks. While Washington remains involved in political quarrels, Wall Street indicates that the unpredictability price could already appear in the balance sheets of global portfolios.