"The value of the U.S. dollar rallied, but only after swiveling a couple times following Trump's nomination of Kevin Warsh. And some of the wildest action was again in precious metals markets, where gold and silver prices plunged following their stellar runs over the last year. Whoever leads the Fed has a big influence on the economy and markets worldwide by helping to dictate where the U.S. central bank moves interest rates."
"A fear in financial markets has been that the Fed will lose some of its independence because of Trump. That fear in turn helped catapult the price of gold and weaken the U.S. dollar's value over the last year. The longtime assumption has been that the Fed should operate separately from the rest of Washington so that it can make moves that are painful in the short term but necessary for the long term."
Kevin Warsh's nomination to lead the Federal Reserve triggered market volatility, with the S&P 500, Dow and Nasdaq falling and the dollar rallying after initial swings. Gold and silver plunged after strong gains over the past year. Whoever leads the Fed influences global markets by shaping interest rate decisions that affect asset prices and the labor market. Trump has pushed for lower interest rates, which can boost growth but raise inflation. Markets fear a potential erosion of Fed independence, a factor that previously supported gold prices and weakened the dollar. Warsh's Fed experience leaves uncertainty about future policy direction.
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