Gold surged to an unprecedented peak as the US Justice Department issued a warning of a potential criminal indictment against the Federal Reserve, coinciding with heightened geopolitical tensions due to escalating protests in Iran. Bullion increased to nearly $4,600 an ounce on Monday following remarks from Fed Chair Jerome Powell, who indicated that the central bank had received grand jury subpoenas from the Justice Department concerning his June congressional testimony regarding renovations of the Fed’s headquarters. The action signifies a heightened conflict between President Donald Trump and Powell, simultaneously rekindling concerns regarding the autonomy of the monetary authority. Deadly protests in Iran have heightened the appeal of precious metals as a safe haven, given the potential for the Islamic Republic’s overthrow, which injects uncertainty into both geopolitics and oil markets.
On Sunday, Trump indicated he was considering various options regarding Iran, while also reaffirming his threats concerning Greenland and expressing skepticism about the NATO alliance, shortly after the recent action against Venezuelan leader Nicolas Maduro. “It serves as a reminder of the numerous uncertainties that markets are currently managing — geopolitics, the growth versus rates debate, and now a new headline-driven indication of an institutional risk premium,” stated Charu Chanana. Gold has recently concluded a year marked by unprecedented performance, driven by a confluence of favorable factors including declining interest rates, increased geopolitical tensions, and diminished confidence in the US dollar. Over a dozen money managers indicated that they have chosen to retain a significant portion of their investments, maintaining confidence in the long-term attractiveness of bullion.
Last week’s US jobs data maintained expectations for further US interest-rate cuts, thereby bolstering non-yielding precious metals. The US employment report indicated that job growth fell short of expectations last month, reinforcing speculation that the Federal Reserve will persist in reducing borrowing costs to bolster the economy. Silver also traded just below an all-time peak. Market participants have factored in a minimum of two interest rate cuts this year, following the Federal Reserve’s implementation of three successive reductions in the latter half of the year, which has provided support for gold, an asset that yields no interest.
Gold experienced an increase of 1.7%, reaching a price of $4,585.39 per ounce as of 9:08 a.m. Singapore time. Silver experienced a notable increase of 4.6%, following a substantial surge of nearly 10% in the previous week. Palladium and platinum experienced an upward movement. The US Supreme Court, in the meantime, did not address Trump’s tariffs, scheduling Wednesday for the forthcoming opinion. A ruling against the levies would undermine his flagship economic policy and represent his most significant legal setback since resuming his tenure in the White House.