Gold and silver prices surged to record highs as the U.S. Justice Department threatened to file criminal charges against the Federal Reserve, renewing concerns about the central bank's independence.
Bullion prices rose toward $4,600 an ounce, while silver surpassed $84, after Federal Reserve Chairman Jerome Powell said the potential criminal indictment should be understood in the broader context of the administration’s threats and ongoing pressure to influence the bank’s interest rate decisions.
The US dollar weakened and yields on 10-year US Treasury bonds rose slightly.
The Trump administration’s repeated and sharp criticism of the Federal Reserve last year was a major factor that negatively impacted the dollar.
Iran protests boost the appeal of safe havens
At the same time, the bloody protests in Iran have boosted the appeal of precious metals as a safe haven, as the prospect of the Iranian regime’s collapse injects a great deal of uncertainty into political issues and oil markets.
Trump said on Sunday that he was considering possible options regarding Iran, while at the same time repeating his threats to seize Greenland and questioning the value of NATO, just over a week after Venezuelan President Nicolas Maduro was detained.
Charu Chanana, a strategist at Saxo Markets in Singapore, said: “It’s a reminder of the amount of uncertainty markets are dealing with, from political tensions to discussions about growth and interest rates. Now, the latest news is adding an institutional risk premium.”
Precious metals are currently dominating the scene amid a strong upward revaluation, driven by a confluence of factors conducive to a significant surge in demand. These factors include declining interest rates, escalating geopolitical tensions, waning confidence in the US dollar, and challenges facing the Federal Reserve—all of which have supported gold and silver. More than 12 fund managers stated they opted against significantly withdrawing their investments, maintaining their belief in gold's long-term appeal.
Silver jumps to a new historic high
The price of silver jumped by as much as 6%, trading at a price slightly above $84.60 an ounce.
The white metal had risen by about 150% last year, after a historic short-covering crisis hit the market in October, and supplies remained tight in London’s main spot market, amid fears that tariffs would prevent shipments of the metal from stockpiled warehouses in the United States.
BMI, a subsidiary of Fitch Solutions, indicated in a note released Monday that it expects the silver market deficit to persist throughout 2026, driven primarily by strong investment demand. It added that industrial demand has also contributed to an unprecedentedly tight physical market supply.
Jobs data supports bets on interest rate cuts
Last week’s US jobs data kept alive expectations of a further cut in US interest rates, which supported non-yielding precious metals.
The US jobs report showed that job growth fell short of expectations last month, reinforcing bets that the Federal Reserve will continue to lower borrowing costs to support the economy. Silver also traded near its all-time high.
Markets have priced in at least two interest rate cuts this year, after the Federal Reserve implemented three consecutive cuts in the second half of last year, which supported gold, which does not yield interest.
Meanwhile, the US Supreme Court set Wednesday as the date for its next ruling on Trump's tariffs. A ruling against these tariffs would undermine Trump's signature economic policies and inflict his biggest legal defeat since returning to the White House. Traders are also awaiting the outcome of the Section 232 investigation, which could lead to tariffs on silver, platinum, and palladium. The results of that investigation are expected in January.
Gold prices rose as much as 2% to a record high of $4,599.87 an ounce, and at 11:18 a.m. London time, it was up 1.9% at $4,593.46 an ounce, while the Bloomberg Dollar Spot Index fell 0.3%, and palladium and platinum prices rose by more than 3%.
Bloomberg strategists' opinion
Nour Al Ali, a strategist at Markets Live, believes that gold is nearing its daily highs, reflecting a confluence of political risks, monetary policy concerns, and geopolitical conditions that are driving demand for safe-haven assets. A move towards the $5,000 level now appears highly likely under these circumstances.
