The prices of gold and silver soared to unprecedented highs after the U.S. Department of Justice threatened potential criminal charges against the Federal Reserve, reigniting concerns over the central bank’s independence. The spike comes as protests in Iran escalated, further driving investors towards safe-haven assets.
As of 2:54 P.M. (GMT+7), gold prices rose by 1.65%, or $74.37 an ounce, to $4,584.98, almost touching the level of $4,600. Meanwhile, silver prices increased by 5.10%, or $4.07 per ounce, to $84.02, marginally away from the level of $85.
The surge followed Fed Chair Jerome Powell’s remarks that any indictment should be “viewed within the larger context of the administration’s threats and sustained pressure” aimed at swaying the bank’s policy on interest rates.
Heightened tensions in Iran added to the demand for precious metals, as deadly unrest fueled speculation over the stability of the Islamic government. On Sunday, President Trump signaled he is considering various measures in response to the developments in Iran, while also repeating earlier intentions regarding Greenland and casting doubt on the relevance of the NATO alliance. This comes just a week after the U.S. ousted Venezuelan leader Nicolas Maduro.
The precious metals market has enjoyed robust upward momentum, bolstered by a series of supportive factors, including declining interest rates, intensifying geopolitical risks, diminished faith in the U.S. dollar, and the unprecedented legal challenge to the Fed. As reported by more than a dozen fund managers, many remain heavily invested in gold, citing confidence in its enduring value.
Silver leapt almost 150% over the past year. The October short squeeze was described as historic, while persistent market tightness in London, attributed to U.S. tariff concerns, continues to restrict the flow of silver from overcrowded American warehouses.
Recent U.S. employment data did maintain expectations of further rate reductions, which continues to benefit non-yielding precious metals. Markets anticipate at least two additional Fed rate cuts this year, following three consecutive reductions in the latter half of last year.
Meanwhile, the U.S. Supreme Court will issue its next decision on Trump’s tariff policy this Wednesday. A ruling against the tariffs could deliver a significant setback to one of Trump’s central economic strategies and mark his most substantial legal defeat since returning to office. In addition, investors are closely monitoring the outcome of the Section 232 inquiry, which could see tariffs imposed on silver, platinum, and palladium. The findings are expected to be released in January.
