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Trump’s Fed feud sparks Wall Street sell-off, dollar dips, gold hits record high

Gold soared as investors fled US assets amid fears of Federal Reserve interference

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A trader works on the floor of the New York Stock Exchange at the opening bell on Monday. Photo: AFP

The American stocks sell-off deepened on Monday after US President Donald Trump stepped up his haranguing of Jerome Powell on social media.

The president’s threats to remove the Federal Reserve chairman have also been weighing on longer-dated Treasuries and the dollar.

The S&P 500 sank 1.9 per cent and the dollar index weakened to a 15-month low as Wall Street reopened after the long holiday weekend. Long bonds fell, pushing the 10-year yield close to 4.4 per cent.

As investors turned away from US securities, haven assets climbed. Gold jumped to another record, above US$3,400 an ounce, while the Swiss franc led a rally in other Group-of-10 currencies.

The US president took to social media to escalate his attack on the Fed chairman, insisted there was “virtually” no inflation and said it was time for “pre-emptive cuts”. The last reading of the Fed’s preferred inflation gauge remains above the central bank’s target, the next readout comes next week.

National Economic Council Director Kevin Hassett said on Friday that Trump was studying whether he is able to fire Powell.

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