Gold Extends Gains as Powell Flags Labor Market Risks; Market Eyes $3,400 Breakout

UK grocery prices edged up in August, as bad weather and poor harvests exacerbated the strain of higher operating costs hitting supermarkets.

The rate of food inflation rose to 4.2% from a year earlier, the highest level since February 2024, the British Retail Consortium said Tuesday. It was 4% in July. Staples such as butter and eggs saw significant price increases due to high demand, tightening supply and higher labor costs, while chocolate also became more expensive as poor harvests have pushed up global prices of cocoa.

Retailers have warned that food inflation will hit 6% by the end of the year as they raise prices to help manage a £26 billion ($35 billion) hike in payroll taxes and 6.7% increase in the minimum wage which took effect in April. They’re urging the government not to raise taxes on retailers in the autumn budget.

“It is becoming more and more challenging for us to absorb the cost pressures we face,” chief executive officers from more than 60 retailers, including Tesco Plc and John Lewis Partnership Plc, wrote in an open letter to Chancellor of the Exchequer Rachel Reeves last week.

The Bank of England said when it cut interest rates this month that tax rises were fueling inflation and unemployment. A post-pandemic burst of inflation has abated across much of the developed world, but the UK is still stuck with the highest price growth among big Western economies.

“As shoppers return from their summer holidays, many may need to reassess household budgets in response to rising household bills,” said Mike Watkins, head of retailer and business insight at marketing firm NielsenIQ, which compiled the data for the BRC.

Source: Bloomberg Europe

Donald Trump on Monday warned that the U.S. could slap a 200% tariff on Chinese magnets if Beijing doesn’t increase shipments to American industries.

Speaking to reporters, Trump said, “We have to charge them 200 percent tariff or something,” adding, “I could destroy China, but I won’t do it.”

This is coming after China’s April decision to restrict exports of rare earth magnets, which are needed to manufacture products like smartphones, chips, electric vehicles, and even defense systems (very important for America).

Beijing added several magnet-related materials to its export control list after Washington increased tariffs earlier this year. China currently controls 90% of the global magnet supply, putting the U.S. and its allies in a tight spot as they race to secure critical tech components.

White House extends tariff deadline as minerals stockpile rises

The situation intensified after the U.S. took a 10% stake in Intel, one of the biggest chipmakers in the world. Intel relies on China’s rare earths for chip production, making supply disruptions a threat to U.S. technology development.

Around the same time, Chinese rare earth exports jumped in July. Government data showed rare earth ore shipments grew by over 4,700 tonnes from June, giving Beijing more weight to throw around in negotiations.

Trump signed an executive order this month extending a 90-day delay on new tariff hikes against Chinese imports. If the order hadn’t been signed, tariffs on Chinese goods would have surged to 145%.

Earlier this year, Washington and Beijing had agreed to drop tariffs temporarily—U.S. tariffs from 145% to 30%, and Chinese tariffs from 125% to 10%. That truce, however, is set to expire on November 9.

Between January and April 2025, the average U.S. tariff rate rose from 2.5% to 27%, reaching its highest level in more than 100 years. By August 2025, it was adjusted to 18.6% after policy tweaks.

Still, the rate remains far above historical norms. As of July, tariffs made up 5% of total U.S. federal revenue, more than doubling the usual share.

Trump invokes IEEPA, enacts new universal tariff and eliminates exemptions

Using Section 232 of the 1962 Trade Expansion Act, Trump also pushed through major increases in steel, aluminum, and copper tariffs, all raised to 50%. He placed a 25% duty on imported cars from most countries and signaled upcoming tariffs on pharmaceuticals, semiconductors, and more.

On April 2, he took things even further, invoking the International Emergency Economic Powers Act (IEEPA) to authorize a universal 10% tariff on all imports from countries without separate deals. That policy kicked in on April 5.

Country-specific tariffs were paused after the 2025 stock market crash, but the White House reactivated them on August 7. This reignited tensions with Canada and Mexico, while pouring more fuel on the U.S.–China dispute.

At its peak, the U.S. slapped 145% baseline tariffs on Chinese imports. China responded with 125% tariffs on U.S. goods. The temporary agreement to ease duties is now close to collapse.

Trump also signed an executive order that will take effect on August 29, 2025, ending the de minimis exemption that had allowed shipments under $800 to bypass tariffs. With the exemption gone, small packages, especially those from Chinese e-commerce platforms, will now face full tariffs like everything else.

Source: CryptoSlate

In a development that sent ripples through financial circles, former U.S. President Donald Trump announced the dismissal of Federal Reserve Governor Lisa Cook. This unexpected move has ignited discussions about the future direction of monetary policy and its potential impact on everything from inflation to the cryptocurrency market. For anyone watching the global economic landscape, understanding this decision’s nuances is absolutely crucial.

Understanding the Role of a Federal Reserve Governor

So, what exactly does a Federal Reserve Governor do? These individuals play a vital role in shaping the nation’s economic future. They sit on the Federal Reserve Board, which is the main governing body of the Federal Reserve System.

Lisa Cook, as a Federal Reserve Governor, has been a key voice in these discussions, bringing her expertise to critical economic challenges. Her removal could signal a significant shift in the balance of perspectives within the Fed.

Why Does This Dismissal Matter for Markets?

Any change at the top levels of the Federal Reserve can create immediate market reactions. Investors crave stability and predictability, especially concerning monetary policy. A dismissal like this introduces an element of uncertainty.

Here’s why it matters:

Therefore, the market’s initial reaction often reflects this heightened state of anticipation and concern about what comes next for the Federal Reserve Governor role.

Potential Shifts in Monetary Policy and Economic Outlook

The Federal Reserve’s decisions directly influence the cost of money and credit, impacting everything from mortgage rates to business investments. A change in a Federal Reserve Governor could foreshadow shifts in these critical areas.

Consider these potential implications:

These policy shifts, driven by changes among the Federal Reserve Governor ranks, are closely watched by economists and investors alike for their profound economic consequences.

What Does This Mean for Cryptocurrency Markets?

Cryptocurrency markets are notoriously sensitive to macroeconomic conditions and changes in monetary policy. While often seen as an alternative to traditional finance, crypto assets are not immune to the ripple effects of Federal Reserve decisions.

How might this dismissal affect crypto?

The uncertainty surrounding the next Federal Reserve Governor and subsequent policy decisions means crypto investors should remain vigilant, observing how these traditional financial shifts play out.

The dismissal of Federal Reserve Governor Lisa Cook is a significant event, sparking questions about the future of U.S. monetary policy and its broader economic implications. While the full impact will unfold over time, it underscores the interconnectedness of political decisions, financial markets, and even the burgeoning world of cryptocurrencies. Staying informed and understanding these crucial shifts is paramount for navigating an ever-evolving financial landscape.

Frequently Asked Questions (FAQs)

1. Who is Lisa Cook?

Lisa Cook is an American economist who served as a Federal Reserve Governor. She is known for her research on macroeconomics, international economics, and the economics of innovation.

2. What is the primary role of a Federal Reserve Governor?

A Federal Reserve Governor serves on the Board of Governors, participating in monetary policy decisions, supervising and regulating banks, and maintaining the stability of the financial system.

3. How does a change in the Federal Reserve’s leadership impact the economy?

Changes in Fed leadership can signal potential shifts in monetary policy, affecting interest rates, inflation, and economic growth. This can influence investor confidence and market behavior.

4. What could this dismissal mean for cryptocurrency markets?

Such dismissals introduce macroeconomic uncertainty. This can lead to volatility in crypto markets, especially if it signals changes in interest rate policy or the broader regulatory environment for digital assets.

5. What is the Federal Reserve’s primary mandate?

The Federal Reserve’s primary mandate is to achieve maximum employment, stable prices (low inflation), and moderate long-term interest rates.

Source: CryptoSlate

U.S. President Donald Trump on Monday took the unprecedented action of firing Lisa Cook, the first African-American woman to serve as a Federal Reserve governor, over claims of mortgage borrowing impropriety.

Here is the full text of the Trump letter in which he announced Cook's removal and which he posted on social media:

THE WHITE HOUSE

WASHINGTON

August 25, 2025

Dr. Lisa D. Cook

Member

Board of Governors

United States Federal Reserve System

20th Street & Constitution Avenue, N.W.

Washington, D.C. 20551

Dear Governor Cook:

Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately.

The Federal Reserve Act provides that you may be removed, at my discretion, for cause. See 12 U.S.C. § 242. I have determined that there is sufficient cause to remove you from your position.

As set forth in the Criminal Referral dated August 15, 2025, from Mr. William J. Pulte, Director of the Federal Housing Finance Agency, to Ms. Pamela Bondi, Attorney General of the United States ("Criminal Referral") (attached to this letter as Exhibit A), there is sufficient reason to believe you may have made false statements on one or more mortgage agreements. For example, as detailed in the Criminal Referral, you signed one document attesting that a property in Michigan would be your primary residence for the next year. Two weeks later, you signed another document for a property in Georgia stating that it would be your primary residence for the next year. It is inconceivable that you were not aware of your first commitment when making the second. It is impossible that you intended to honor both.

The Federal Reserve has tremendous responsibility for setting interest rates and regulating reserve and member banks. The American people must be able to have full confidence in the honesty of the members entrusted with setting policy and overseeing the Federal Reserve. In light of your deceitful and potentially criminal conduct in a financial matter, they cannot and I do not have such confidence in your integrity. At a minimum, the conduct at issue exhibits the sort of gross negligence in financial transactions that calls into question your competence and trustworthiness as a financial regulator.

The executive power of the United States is vested in me as President and, as President, I have a solemn duty to ensure that the laws of the United States are faithfully executed. I have determined that faithfully executing the law requires your immediate removal from office. Thank you for your attention to this matter.

Source: TradingView

Federal Reserve Bank of New York President John Williams said Monday that the era of persistently low underlying interest rates does not appear to be over, based on his reading of the data.

Williams, whose comments came from the text of a speech prepared for a conference in Mexico City, spoke about R-Star, which is an estimate of the interest rate that has a neutral impact on the economy. He did not comment on the outlook for monetary policy in the prepared speech.

Noting the long-running factors affecting underlying interest rates, Williams said, "The global demographic and productivity growth trends that pushed R-Star down have not reversed."

Growth-adjusted R-Star for the U.S., Euro area, U.K. and Canada is around 0.5% and that is similar to the pre-pandemic period, Williams said.

“The era of low R-Star appears far from over,” Williams said.

Some events in the last several years have made estimating R-Star challenging, such as surging inflation related to the pandemic. That prompted aggressive interest increases by central banks around the world.

Fed officials have been steadily raising estimates of their longer-run interest rate target, suggesting a fundamental shift in the economy toward higher borrowing costs.

Williams’ comments suggested that low rates will return at some point given the economic forces that have led to a low R-Star estimate.

But he also noted in his remarks that “policymakers are well advised to avoid placing too great confidence in precise estimates” of things like R-Star given uncertainty around some of the economic factors used to divine the value.

Source: Yahoo Finance

President Donald Trump fired Federal Reserve Governor Lisa Cook late Monday, a sharp escalation in his battle to exert greater control over what has long been considered an institution independent from day-to-day politics.

Trump said in a letter posted on his Truth Social platform that he is firing Cook because of allegations that she committed mortgage fraud. Bill Pulte, a Trump appointee to the agency that regulates mortgage giants Fannie Mae and Freddie Mac, made the accusations last week.

Pulte alleged that Cook had claimed two primary residences -- in Ann Arbor, Michigan and Atlanta -- in 2021 to get better mortgage terms. Mortgage rates are often higher on second homes or those purchased to rent.

The announcement came days after Cook said she wouldn’t leave her post despite Trump previously calling for her to resign. The Fed's board has seven members, meaning Trump's move could have deep economic and political ramifications.

Trump said in announcing the move that he had the constitutional authority to remove Cook, but doing so will raise questions about control of the Fed as an independent entity.

The firing is likely to touch off a legal battle and Cook could be allowed to remain in her seat while the case plays out. Cook would have to fight the legal battle herself, as the injured party, rather than the Fed.

It is the latest effort by the administration to take control over one of the few remaining independent agencies in Washington. Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him.

Forcing Cook off the Fed’s governing board would provide Trump an opportunity to appoint a loyalist. Trump has said he would only appoint officials who would support cutting rates.

Source: Yahoo Finance