Gold Hits Record High, Silver Jumps on Fed Independence Fears
Chairman Powell decries 'unprecedented' political pressure as a Department of Justice probe sparks a flight to safe-haven assets.
Gold prices surged to a new record high and silver jumped more than 4% on Monday as investors piled into precious metals amid mounting anxiety over the political independence of the U.S. Federal Reserve.
The dramatic flight to safety was ignited by Fed Chair Jerome Powell's confirmation that the central bank has been served with grand jury subpoenas by the Department of Justice. The move sent a shockwave through markets, fueling a rally in assets seen as a store of value outside of government-controlled currencies.
In the wake of the news, spot gold touched a record $4,610.5 per ounce, while silver futures posted one of their sharpest rallies in recent memory, climbing over 4.8% to trade as high as $83.88 per ounce. The surge reflects deep investor concern that political interference could compromise the central bank's ability to manage monetary policy and control inflation.
At the heart of the market's anxiety are statements from Chairman Powell himself, who, according to a report from Interest.co.nz, described the subpoenas as an "unprecedented action" designed to exert political pressure on the Fed's interest rate decisions. The investigation reportedly relates to renovations at the Fed's headquarters, but is being widely interpreted as a politically motivated maneuver. This follows a weekend report from The Guardian detailing an escalating campaign against the central bank.
"The perception of a threat to the Fed's autonomy is a significant bullish catalyst for gold," one market analyst noted. "An independent central bank is a pillar of confidence in the U.S. dollar. Any erosion of that confidence sends investors looking for hard assets that can't be devalued by political whim."
Analysts at Morgan Stanley reiterated a bullish stance on precious metals, suggesting the current environment could push gold even higher. The bank maintains a forecast for gold to reach $4,800 per ounce by the fourth quarter of 2026, citing a combination of anticipated rate cuts, persistent geopolitical risk, and strong buying from central banks and investors.
However, not all analysts are predicting a straight line up. Ajay Kedia of Kedia Commodities, while structurally bullish, warned of potential near-term volatility. He noted that a rebalancing of the Bloomberg Commodity Index could trigger a temporary correction in bullion prices.
For now, the political drama surrounding the Federal Reserve has eclipsed other market drivers. As long as the independence of the world's most influential central bank is perceived to be under threat, the allure of gold and silver as the ultimate safe havens is poised to shine brightly.