Janet Yellen’s term as Federal Reserve chair ends on February 3rd. President Trump is expected to announce the new Federal Reserve Chair very soon, perhaps even this week. He said that we’ll get to know his choice before a tour in Asia in early November. Since that has not taken place so far, we would like to prepare you for the outcomes of Trump’s possible decisions. Moreover, we will analyze which candidate would be the best for the gold market.

The list of pretenders is rather short:

We will start with Gary Cohn, as his odds are the smallest, just about 2 percent, according to PredictIt. This is because of Cohn, who is the president’s chief economic adviser, has neither formal economics background nor experience in central banking. He also worked years for Goldman Sachs, making a decent fortune, which may be not welcomed in Senate, and especially not by the Democrats. Last but not least, he criticized Trump’s response to the protests in Charlottesville. It’s difficult to categorize him as hawk or dove, as very little is known about his view on monetary policy. But as he is a pragmatist and stands not very far from Yellen’s stance, his choice – which is very unlikely – would not significantly affect the gold market (but there might be some volatility at the beginning until his views would become clear for the investors – and because it would surprise markets).

Kevin Warsh has greater chances – PredictIt assigns him an 11 percent probability of becoming the next Fed chair. He was an economic adviser to President George W. Bush from 2002 to 2006 and a Fed governor from 2006 to 2011, so his experience is better suited than Cohn’s. Warsh’s impact on the gold market could be significant as he is considered to be among the most hawkish of the contenders. He opposed the second round of quantitative easing, so he might try to accelerate the quantitative tightening a bit. He will also support the deregulation of the financial industry. Hence, his choice would increase the interest rates, a bearish factor for the gold prices. Indeed, when he led the polls two weeks ago, the short-term interest rates moved higher.