Just four months into his new term, President Donald Trump has already shaken global financial markets. As the first half of the year wraps up, U.S. stocks have rebounded sharply after a steep drop. Meanwhile, Trump’s aggressive tariff push, his massive “Big and Beautiful” spending bill, and his mounting pressure on the Federal Reserve for rate cuts have driven the Dollar Index to its worst first‑half showing in 22 years—fueling a surge in gold and cryptocurrencies.

So far this year, the Dollar Index has dropped 10.86%, recently closing at 96.73—its worst first‑half performance since 1973, when Richard Nixon was president. With the dollar weakening, New York gold futures have jumped to $3,340 an ounce, up nearly 26% for the year—almost matching last year’s full‑year gain.

This shift is largely driven by uncertainty surrounding Trump’s trade policies, his push for another large stimulus package that weakens the dollar, and his persistent pressure on the Fed to cut interest rates. As the dollar loses its traditional safe‑haven appeal, gold is gaining ground.

While gold is typically viewed as a hedge against geopolitical risk, events such as the Russia‑Ukraine conflict in 2022 or this year’s Israel‑Iran tensions provided only short‑lived boosts. Long‑term gold prices hinge more on dollar strength. Gold is a scarce resource with limited supply, and when the dollar weakens, gold’s relative value rises.

This trend is likely to continue in the second half of the year. Although Trump has secured trade agreements with the U.K. and China, deals with other countries remain uncertain—and new surprises are always possible. As a result, central banks may favor holding more gold over U.S.‑dollar reserves. Trump, for his part, supports a weaker dollar because it helps boost exports, reduce trade deficits, and advance his “Make America Great Again” (MAGA) agenda.

The “Big and Beautiful” Bill Could Deepen U.S. Debt

A key factor is Trump’s massive “Big and Beautiful” bill—reportedly a point of contention with Elon Musk. According to the Congressional Budget Office, the measure could add $3.3 trillion to U.S. debt over the next decade, on top of today’s $37 trillion load. The bill has passed the House, and while it faces debate in the Senate, Republicans—Trump’s party—hold the majority, making passage likely. Trump has said he could sign it as soon as July 4.

Trump Targets the Fed—and Eyes Full Control

With the Fed showing no sign of cutting rates soon, Trump’s patience is running thin. After repeatedly attacking Fed Chair Jerome Powell, Trump intensified his criticism on Monday, arguing rates should fall to 1.75% or lower (they are currently 4.25%–4.5%).

He posted a chart comparing global rates, scrawling that Powell has “cost the USA a fortune” and continues to do so. He also blasted the entire Fed Board, saying its members just sit and watch—and are equally to blame.

Powell’s term ends next May, yet Trump is reportedly considering naming a successor early—a “shadow Fed chair”—to curb Powell’s influence and clear the way for sizable cuts. Though Trump originally appointed Powell, this time he is likely to select someone more closely aligned with his policy goals—effectively bringing the Fed under Trump’s control.

More Dollar Weakness Ahead?

All signs point to continued dollar weakness—perhaps steeper than in the first half. Trump, a longtime gold enthusiast who once said, “Whoever owns the gold makes the rules,” sees a soft dollar as a tool to attract investment, spur exports, and encourage lower‑cost domestic borrowing and production. The price, of course, is further dollar erosion.

Can Trump really pull this off? For now, his unorthodox style appears to be landing enough blows to rattle even the most seasoned market veterans. And more surprises may still lie ahead.