News broke just after noon on Wednesday: House Republicans are meeting privately with Federal Reserve Chair Jerome Powell following days of escalating tension. The reason? President Trump may be preparing to fire him.

Multiple reports confirm that Trump has discussed Powell’s removal with GOP lawmakers and even drafted a termination letter—though he later denied any formal decision had been made. But the denials hold little weight when paired with what Trump told reporters directly from the Oval Office.

  • “Powell is doing a terrible job and is costing the country a lot of money.”
  • “I’m surprised he was ever appointed.”
  • “The biggest cost overrun in America is the overrun of interest rates.”
  • “His board isn’t doing its job either. They should be reining him in.”

When asked whether he would fire Powell, Trump said it was “highly unlikely, unless there is fraud.”

Meanwhile, reports surfaced that Trump had floated the idea with Republican lawmakers and received broad support. A senior White House official said Trump had already shown the firing letter to lawmakers earlier this week, despite later claiming he hadn’t.

Powell’s Firing Would Rattle Markets
Whether Trump fires Powell now or waits until after the election, the message to markets is clear: the Fed’s independence is under threat.

Markets are starting to price that in. On Wednesday, the iShares 20+ Year Treasury Bond ETF (TLT) dropped more than 0.5%, extending its long-term downtrend. The U.S. Dollar Index also plunged nearly 1% on the news, continuing its stealth bear market.

When both bonds and the dollar are falling, gold tends to shine. And with Powell’s job on the line, now is the time to pay attention.

Add Powell’s Firing to the List of Reasons to Buy Gold
1. Exploding U.S. Debt
The Senate just passed the so-called “Big Beautiful Bill,” a sweeping tax-and-spend package expected to add $3.3 to $4 trillion to the national debt. That estimate doesn’t include extensions or emergency provisions.

The Congressional Budget Office has already issued warnings, but markets are watching what matters: the structural deficit problem. With no fiscal restraint in sight, the U.S. is increasingly reliant on debt monetization, which undermines confidence in the dollar and boosts demand for hard assets—particularly gold.

Central banks around the world are taking notice. Many are diversifying out of U.S. Treasuries and into gold.

2. The U.S. Dollar Is Quietly Breaking Down
The dollar hasn’t crashed, but it’s showing all the signs of a long-term trend reversal. Since peaking in late 2022, the Dollar Index (DXY) has formed a consistent pattern of lower highs and lower lows.

This slow decline is driven by:

  • Lower growth expectations in the U.S.
  • Waning demand for Treasuries
  • Rising deficits
  • A Fed near the end of its tightening cycle

A weakening dollar reduces the opportunity cost of holding gold and boosts demand from foreign buyers. Historically, sustained dollar weakness has been one of the most consistent tailwinds for gold.

3. Bond Market Misfires Spell Trouble
The bond market is not buying into the stock market’s optimism. Treasury yields remain subdued, even as inflation remains elevated, suggesting institutional investors are more concerned about slowing growth than persistent inflation.

This divergence matters. Bonds reflect macro expectations. When bonds flash risk-off while equities push higher, gold becomes the hedge of choice.

And after last week’s hot CPI print, markets are no longer convinced a July rate cut is coming. That kind of policy uncertainty favors gold.

4. Central Banks Are Buying… and They Want Their Gold Back
Central bank gold buying is the quiet engine behind this bull market. In 2023, global central banks added more gold to their reserves than in any other year on record. That momentum has continued into 2024 and 2025, with countries like China, India, and Turkey leading the way.

5. The Repatriation of Gold
More recently, the Financial Times reported that Germany and Italy are facing pressure to repatriate their gold from New York vaults. The motivation? Rising geopolitical risk and Trump’s increasing threats to the Fed’s independence.

If major central banks begin pulling their gold from U.S. storage, it sends a powerful signal: confidence in U.S. custodianship is fading. That could spur more global gold buying—and reduce available supply.

Technical Outlook for Gold
Gold remains in a strong long-term bull market trend. Since breaking out in November 2022, the U.S. Gold Fund ETF (GLD) has marched steadily higher—even as equity markets entered a new uptrend of their own.

That dynamic is unusual. Gold often thrives when stocks fall. But over the past two years, both have rallied, signaling deeper macro stress behind the scenes.

More recently, GLD has been consolidating near its highs for two months. The range is tightening, with 20- and 50-day moving averages sloping higher underneath price. Technically, this looks like a coiled spring—waiting for a trigger.

The catalyst? Trump firing Powell.

If that happens, or even if the headlines escalate, it could trigger a sharp breakout higher. That event would also amplify other bullish catalysts, from dollar weakness to central bank demand.

We expect GLD to target $350 within the next 6–12 months, a move of roughly 15% from current levels.

How to Trade the Gold Bull Trend
The simplest way to play it is to buy and hold GLD.

But for investors looking to leverage the move, consider long-dated options. One idea: the March 20, 2026 GLD $310 call, currently trading around $1,945 per contract.

If GLD hits $350 before expiration, that option would deliver a 105% return, compared to 15% for a standard share position.

As always, make sure you understand the risks of options trading. Leverage cuts both ways.

— Chris Johnson

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Source: Money Morning