SINGAPORE/HONG KONG – Precious metals gold and silver surged to record levels on Monday as news of a US Justice Department probe into the Federal Reserve rattled markets. Investors rushed to safe-haven assets amid growing concerns over the independence of the US central bank.
Gold jumped 1.6% to nearly $4,600 per ounce, while silver approached $85 per ounce, both record highs. The US dollar weakened roughly 0.2% against major peers, according to Bloomberg, reflecting investor anxiety over potential political interference in monetary policy.
Powell Confirms Unprecedented Justice Department Subpoenas
Federal Reserve Chair Jerome Powell confirmed late Sunday that the central bank had received grand jury subpoenas related to his testimony before the Senate in June about a major Federal Reserve office renovation project. Powell described the move as “unprecedented” and a pretext in President Donald Trump’s ongoing campaign for lower interest rates.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a statement.
The Fed has indicated it plans to hold interest rates steady at its upcoming policy meeting at the end of January. Analysts warn, however, that political pressure on the central bank could erode market confidence in US monetary policy.
Stephen Innes of SPI Asset Management told AFP, “The subpoenas mark a clear break in the long-held boundary between politics and monetary policy, a line markets once assumed was untouchable. Investors are not weighing the odds of charges so much as the risk that political pressure has crept into the Fed’s decision-making.”
Market Reaction and Safe-Haven Demand
Ray Attrill, head of FX strategy at National Australia Bank in Sydney, said Powell was “clearly going on the offensive” after repeated political pressure. He added, “This open warfare between the Fed and the US administration — and to the extent that you take Powell’s comments at face value — it’s clearly not a good look for the US dollar.”
Earlier in Asian trading, the dollar had climbed to a one-month high following Friday’s jobs report, which reinforced expectations that the Fed would hold interest rates steady. Rising geopolitical tensions, including reports of hundreds of deaths in Iran protests, further increased demand for safe-haven assets such as gold and silver.
Upcoming Economic Data and Market Outlook
Financial markets are closely watching a busy week ahead, including the release of the US consumer price index for December on Tuesday. This data is one of the final key indicators before the Federal Reserve’s next monetary policy meeting. Analysts from Standard Chartered noted that US inflation remains above the Fed’s 2% target, limiting the possibility of further rate cuts unless there is a significant economic slowdown.
The labor market remains resilient, which could maintain upward pressure on US Treasury yields and the dollar. Meanwhile, the fourth-quarter earnings season begins this week, offering potential optimism for equity investors. A Supreme Court ruling on the legality of Trump’s emergency tariffs is also expected as early as Wednesday.
