What does it mean for the market if Trump really "fires" Powell? This is a scenario of Goldman Sachs' "gold price of $4500".

Trump declares war on Powell? Goldman Sachs warns: Crisis of Fed independence may trigger surge in gold prices. As the European Central Bank continues to cut interest rates, Trump once again aims his criticism at Powell, threatening to fire him if he does not lower rates - this is bringing new uncertainty to the financial markets. Analysts point out that although legally unclear, both within the Trump team and among market experts warn that this move could lead to a severe market collapse. Goldman Sachs points out that historically, whenever a central bank loses its independence, it leads to a crisis of confidence in the fiat currency, causing gold prices to skyrocket. Goldman predicts that if the Fed becomes a political tool, it could push gold prices up to $4500 per ounce. Is Trump getting desperate? Nominating Powell three times in a day On Wednesday local time, Powell spoke at the Economic Club of Chicago, where he reiterated that policies like tariffs have led to high uncertainty in the economy, and the Fed will wait for more clarity before considering rate cuts. When asked if the Fed would intervene in a stock market crash, Powell said they would not. On Thursday morning, Trump posted on social media: Always too late and wrong" Fed Chair Jerome Powell released a report yesterday, it is another typical, complete chaos! Powell should have lowered rates like the European Central Bank did, but he should definitely cut them now. The sooner Powell resigns, the better! At noon on Thursday, Trump called out Powell two more times. Trump said: I don't think Powell is doing his job properly. If I request it, he should leave. Powell does not make me happy. He always acts slowly; after a few minutes, Trump "attacked" Powell again, saying that the Fed should cut rates, which is what the Fed owes to the American people. Powell will face significant political pressure. According to reports, Trump has been discussing firing Powell for some time, but his advisors have been trying to prevent it. Trump insisted at a White House press conference that if he asks Powell to resign, Powell will step down. But when asked if he is trying to remove the Fed Chair, he did not give a clear answer; while Powell firmly stated that he would not leave. Can Trump do this? It's crucial to look at this ruling in May One of the key questions is: does Trump have the power to dismiss Powell? Currently, the answer is not clear. Under federal law, Fed governors are nominated by the President and confirmed by the Senate, with terms of 14 years; one person serves as chairman with a term of four years. During this period, the President must have a "good reason" (usually understood as misconduct or dereliction of duty) to dismiss them. This restriction aims to protect the Fed from political interference. However, a ruling by the US Supreme Court in May could change everything. As previously mentioned by Wall Street, the Trump administration has urgently asked the US Supreme Court to authorize the President to dismiss senior officials of two independent federal agencies (Gwynne Wilcox of the National Labor Relations Board and Cathy Harris of the Merit Systems Protection Board) and requested a special hearing for this case in May. Evercore ISI analyst Krishna Guha warned that the ruling in the "Trump v Wilcox" case could expand presidential powers by allowing the President to dismiss officials of previously thought politically untouched agencies, thus undermining the independence of the Fed and other government agencies. Powell also mentioned this case in his speech on Wednesday: "People often talk about this case. I don't think this decision would apply to the Fed, but I'm not sure. We are currently closely monitoring the situation." Bezenberg and Warren warn: the risk of market collapse is imminent According to reports, the US Treasury Secretary Bezenberg has repeatedly warned White House officials that any attempt to dismiss Powell could destabilize the financial markets. Meanwhile, Democratic Senator Elizabeth Warren from Massachusetts also warned in an interview that firing the Fed Chair could lead to a collapse in the US markets. Although Warren often publicly criticizes Powell, she admits that removing the Fed Chair would bring significant risks: "Although I often clash with Powell on regulations and interest rates, please understand this: if the US president can fire Chair Powell, it will cause a collapse in the US markets." Kathy Jones, Chief Fixed Income Strategist at Schwab Center for Financial Research, cautioned that attempting to dismiss Powell could exacerbate the selling of US bonds and the dollar, a pattern that usually only occurs in emerging market economies or when confidence in a country's governance is shaken. Jones said: "This is something that would not be done in major developed countries, the more vigorously he pushes, the worse the situation will be." "Even if investors acknowledge Powell's potential replacements, damage has already been done - bond yields will rise, the dollar will fall. Because there is no credibility." Goldman Sachs: In an extreme scenario where the Fed is "controlled," gold prices will surge to $4500 In this debate over the independence of the Fed, analysts at Goldman Sachs warn that if the Fed loses its independence, the market will face extreme volatility. As previously mentioned by Wall Street, in Goldman's extreme scenario prediction, a "compliant Fed" will succumb to political pressure and cut rates significantly regardless of inflation risks, leading to a depreciation of the dollar, a decrease in real interest rates, and thus driving the price of gold. When the Fed's decisions are no longer based on economic data but on the political needs of the White House, gold will be sought after as a safe-haven asset. Goldman points out that historically, whenever a central bank loses its independence, it leads to a crisis of confidence in the fiat currency, causing gold prices to rise significantly. Goldman expects that in an extreme tail-risk scenario, as market concerns increase about the Fed's subservience or changes in US reserve policy risk, leading to central bank demand continuing to rise to 110 tonnes/month, the rebound in ETF holdings to levels during the pandemic era due to US recession, speculative positions reaching historical range tops, gold prices could reach close to $4500 an ounce by the end of 2025.From "Wall Street News", author: Li Xiaoyin; Edited by GMTEight: Liu Jiayin."Je vais au magasin acheter du lait." "I am going to the store to buy some milk."