An Unstoppable Force (Trump) Meets an Immovable Object (Powell)
Let's look at the implications of a brewing conflict between the president and the Fed Chair. Plus, how to play gold — another seemingly unstoppable force — right now.
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It now appears Trump’s primary focus is to break China. Unfortunately, Fed Chair Jerome Powell has no interest in participating in that endeavour.
Powell made it clear Webnesday that the Fed will sit it out regarding tariffs. While Trump would love to see interest rates cut (and made that clear on Thursday morning), the unknown impact of tariffs on inflation and employment numbers is a concern. It puts the Fed into reactive mode, and that’s if they even react at all.
I’d wager that Trump and his administration are examining every possible way to relieve Powell of his position. By not budging, Powell is forcing Trump’s hand, testing his conviction, and taking the responsibility and outcome of the tariff’s impact on the economy away from the Fed.
Whether you agree with this approach or not is an individual choice, but we’ve reached the point of an unstoppable force meeting an immovable object. Unfortunately, the likely losers in that scenario are virtually everyone not directly associated with the unstoppable force and immovable object.
The Power of Gold
The biggest winner from the tariff mess is gold. While I’ve been a proponent of gold for months, even doubting myself at points in 2024 and 2025, it’s a tough chase here, as Louis Llanes explains.
The SPDR Gold Shares ETF GLD has reached an extension level, as measured by its Bollinger Band Width, that we’ve experienced six prior times in three years. Four out of six times, GLD has consolidated for several months following the overextension.
The good news for bulls is that the other two times resulted in a continuation of the rally, while pullbacks were limited to around 10%. I’m certainly not looking to short gold here, but I am not looking to add to an existing position or establish a new position.
Put protection or a stop loss around $290, maybe even $295, on GLD seems reasonable, with a target re-entry around $270 should we get a short-term correction. Otherwise, just continue to ride the move higher and bump your stop up along the way.
At the time of publication, Byrne had no positions in any securities mentioned.
