Gold hits record high on worries over Fed independence

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Gold rose to a record high and the dollar weakened on Monday after US prosecutors launched a criminal investigation into Federal Reserve chair Jay Powell, stoking concerns about the central bank’s independence.

The metal climbed as much as 2 per cent to $4,600 a troy ounce, while the dollar weakened 0.3 per cent against a basket of major currencies.

Futures tracking US stocks also declined, with those of the S&P 500 down 0.6 per cent and the Nasdaq 100 shedding 0.8 per cent. The yield on the 10-year Treasury, which moves inversely to the price, climbed 0.02 percentage points to 4.19 per cent.

“The immediate market focus is likely to be on concerns regarding the administration’s influence over the Fed’s policy independence,” said Tai Hui, chief Asia-Pacific market strategist at JPMorgan Asset Management.

Powell on Sunday said the Fed had received grand jury subpoenas and a threat of criminal indictment from the justice department relating to his testimony before Congress about a $2.5bn renovation of the central bank’s headquarters.

“The Fed as we have understood it as an institution over the past couple of decades is fading from view. It’s operating in a different environment,” said Richard Yetsenga, chief economist and head of research at ANZ.

Gold’s record comes as rising geopolitical tensions fuel demand for the metal.

“Gold is the pre-eminent geopolitical risk asset, more so than any other asset,” said John Woods, chief investment officer for Asia at Lombard Odier. “There is just so much geopolitical risk in the market right now.”

Just over a week after US forces captured Venezuelan leader Nicolás Maduro, President Donald Trump said he was considering military operations in Iran over the regime’s crackdown on nationwide protests.

Gold pared some of its early advances to trade at about $4,580, still higher than the previous record of $4,549 set at the end of 2025.

The justice department probe into Powell follows a campaign from the Trump administration to force the Fed to cut interest rates more aggressively despite lingering concerns over reigniting inflation.

Lombard Odier’s Woods forecast continued volatility in gold but not in bonds, equities or oil.

“It seems to me that these traditional risk assets look through this type of geopolitical risk and gold doesn’t,” he said. “Gold is kind of unique in that respect.”