Investors rushed into gold as rising geopolitical risks and renewed doubts about Federal Reserve independence rattled markets and weakened the dollar.
Gold prices surged to a fresh all-time high on Jan. 12, breaking more than $4,600 per ounce, as escalating geopolitical tensions and investor concerns about Federal Reserve independence reignited demand for safe-haven assets, battered the dollar, and weighed on stocks.
Spot gold rose by more than 2.3 percent to $4,615.36 per ounce as of 10:07 a.m. EST on Jan. 12, while U.S. gold futures for February delivery climbed by more than 2 percent to $4,611.3, after briefly surging to about the $4,626 mark in earlier trading.
Silver also surged to a new peak, with spot prices rising by 6.6 percent to $85.22 per ounce as of 10:04 a.m. EST.
The rally in precious metals unfolded alongside a broad pullback in risk assets.
Wall Street futures slid, and the dollar fell by the most in three weeks as tensions between the Fed and the Trump administration escalated, compounding geopolitical turbulence that includes a deadly regime crackdown on protesters in Iran and U.S. President Donald Trump’s threats of a strong response, including possible U.S. military intervention.
Fed Concerns Reignite ‘Sell America’ Trade
Investor unease intensified after news broke over the weekend that the Department of Justice (DOJ) served the Federal Reserve with grand jury subpoenas and threatened to indict Federal Reserve Chairman Jerome Powell over congressional testimony he gave last summer, a move Powell called “pretexts” for the Trump administration to gain more influence over interest rates, which Trump has repeatedly pressed to be cut sharply.
“The dollar sold off across the board as the Fed received DOJ subpoenas, reigniting both independence risks and a brief return of ‘sell-America’ trade,” analysts at ING wrote in a note. “It’s wait-and-see mode now as markets try to assess the effective implications of all this.”
Trump has repeatedly said the Fed is behind the curve on rate cuts, blaming current monetary settings for keeping borrowing costs elevated and restraining growth even as inflation has cooled and labor markets show signs of softening. Much of his criticism has focused on Powell, whom he has accused of incompetence and political bias.
Powell has countered that policy decisions remain data-driven, saying that persistent inflationary pressures explain why rates have not been cut faster.
