Trump "forces Powell to abdicate": the US dollar credit crisis and the historic reconstruction of the gold market

On April 22, 2025, the international financial market was plunged into severe turbulence due to the fierce game between the Trump administration and the Federal Reserve. U.S. President Trump has repeatedly blasted Federal Reserve Chairman Powell on social media, calling him "the biggest loser" and "Mr. Too Late" and threatening to "fire him immediately." This remark directly triggered the "Black Monday" in the U.S. stock market - the Dow Jones Industrial Average plummeted 2.48%, the S&P 500 fell 2.36%, and the Nasdaq plummeted 2.55%. The U.S. dollar index fell below the 98 mark to 97.923, hitting a new low since 2023. At the same time, at noon in the Asian session, the spot gold price soared to US$3,599.93 per ounce, up 1.63% from the previous day, approaching the US$3,500 mark, setting a new all-time high and redrawing the historical record. Market concerns about the "dollar credit crisis" have reached a critical point.

Event context and underlying conflict

Trump's attacks on Powell have been ongoing for months. On April 17, he posted on social media that "Powell should have cut interest rates like the European Central Bank" and threatened to "leave as soon as possible." On April 21, he further accused Powell of "destroying the U.S. economy," saying his policies had caused corporate costs to soar and the stock market to plummet. According to people familiar with the matter, Trump's team has privately discussed the feasibility of firing Powell and is considering replacing him with former Federal Reserve Board Governor Kevin Walsh or current Board Governor Lael Brainard.

Behind this action is Trump’s dual goal:

Economic stimulus: Hedge the negative impact of tariff policies by pressuring interest rate cuts. The U.S. core PCE price index rose to 2.9% year-on-year in March, but GDP growth slowed to 1.8% in the first quarter, increasing the risk of stagflation. Trump tried to blame the economic woes on Powell's "policy lags." Political game: paving the way for re-election in 2026. If the Fed cuts interest rates before the election, it may boost market confidence, but if Powell refuses to compromise, Trump will need to reshape the policy path by "changing people."

Powell has repeatedly emphasized the independence of the Federal Reserve. On April 16, he made it clear in a public speech: "The Federal Reserve's decisions are based on economic data, not political pressure." According to US law, the president does not have the right to fire the Federal Reserve chairman at will unless he can prove his "malfeasance or misconduct." Historical precedent shows that policy differences are not grounds for dismissal. Powell has stated that if he encounters legal challenges, he will fight to the end through legal procedures.

But Trump is trying to break with that tradition. He declared at a White House meeting on April 21: "If I want him to leave, he will have to leave soon." His team even plans to push the Supreme Court to reinterpret the Federal Reserve Act to weaken the independence of the central bank.

Institutional warnings and risk reminders

Goldman Sachs warned that if the Federal Reserve becomes a political tool, the US dollar could be overvalued by 20% and gold prices could soar to $4,500 an ounce. "Independence is the core asset of the U.S. dollar. If the market is worried about government intervention in the central bank, the credit of the U.S. dollar will suffer irreversible damage," said Cuadrado, a strategist at Bilbao Bank.

Short-term overbought risk: The daily RSI reaches 78, and there is a need for a technical pullback. The $3,500 mark may trigger profit-taking. The support below is $3,450 (5-day moving average) and $3,420 (10-day moving average). Policy black swan: If the minutes of the Federal Reserve meeting on April 23 release a "hawkish signal" or the Trump administration unexpectedly eases its tariff policy, it may cause a rapid decline in gold prices.