Gold surpassed a new all-time high on Tuesday, April 22, trading at 3,500 dollars per ounce, driven by the tension between the White House and the Federal Reserve, the increase in tariffs and growing uncertainty about the global economy. But while the markets took refuge in the precious metal, Wall Street experienced an unexpected rally after conciliatory statements on China and monetary policy.

Since the beginning of 2025, gold has risen by 30%, consolidating its position as the safe haven asset par excellence in times of turbulence. This escalation occurs in a complex context: a trade war with China that escalates week by week, and an internal conflict in Washington between President Donald Trump and the head of the Federal Reserve, Jerome Powell.

Earlier Monday, markets plunged after Trump called Powell a "big loser" on social media and urged him to "lower rates, NOW." In addition, rumors circulated - partially confirmed by his economic advisor Kevin Hassett - that the president would be evaluating whether he has the power to remove Powell.

These episodes sparked fears of a breakdown in the Fed's independence, which caused many investors to flee to gold. As explained by Rania Gule, an analyst at XS.com, quoted by AFP, the rise was due to "fears of recession in the US economy and rising political tensions".

What happened next? Despite that climate, Wall Street rallied strongly on Tuesday, with the Dow Jones gaining 2.7% and the S&P 500 2.5%, following statements by White House spokeswoman Karoline Leavitt assuring that Trump is "paving the way for a deal with China." In addition, as reported by CNN, Donald Trump nuanced his thoughts on Powell and said he did not plan to fire him.

The mood improved further after Treasury Secretary Scott Bessent said at a private event in Washington that he expected "an early de-escalation" in the tariff dispute with the Asian giant.

Patrick O'Hare, an analyst at Briefing.com, noted that part of the stock market rebound was due to the perception that Trump will not fire Powell, but would be "laying the groundwork to blame him if a recession comes."

Tesla and the political effect

One of the day's leading players was Tesla, which reported a 71% drop in its first-quarter earnings, with a direct impact from "the shift in political sentiment," according to the company itself. Its shares have fallen more than 35% in 2025, in part because of Elon Musk's increasingly visible role in Trump's cabinet.

Although many investors chose to ignore it, the International Monetary Fund warned that Trump's new tariffs will hurt global growth. The IMF revised down its projection for this year from 3.3% to 2.8%, warning of long-term risks to the global economy.

How far will gold go?

With a combination of political crisis, trade war, falling dollar and institutional weakness, gold continues to gain ground. Some analysts, such as those quoted by Investopedia, anticipate that the metal could reach $3,700 per ounce if the pressure on the Fed continues and a solid agreement with China is not reached.

Gold is not going up just for the sake of it: it is going up because the global political and economic system is under pressure. Markets have reacted in defensive mode, with one eye on geopolitics and one eye on the Fed. What happens in the coming weeks could determine whether this record high is just a momentary peak or the beginning of a new golden era for the precious metal.

With information from AFP