Gold prices have surged to a fresh all-time high as mounting concerns over threats to the independence of the US Federal Reserve drive investors toward safe-haven assets.
The precious metal climbed by around 2% in early Monday trading, reaching approximately US$4,600 per ounce (£3,415), surpassing the previous record set late last year. The move underscores intensifying investor unease around political risk and monetary policy stability.
Rising gold prices are typically a signal of heightened risk aversion. During periods of economic or political stress, investors often favour assets perceived as stores of value, such as gold, over equities and other risk-sensitive investments.
Over the past 12 months, gold has gained close to 70%, reflecting persistent global uncertainty, rising geopolitical tensions, and growing doubts over fiscal and monetary discipline in major economies.
The latest rally follows comments from US Federal Reserve Chair Jerome Powell, who revealed that the central bank is facing threats of criminal indictment related to his testimony on renovations to Federal Reserve buildings. Mr Powell warned that such actions undermine the role of the Fed and raise serious questions about whether future monetary policy could be shaped by “political pressure or intimidation”.
Markets interpreted the comments as a significant escalation in President Donald Trump’s ongoing criticism of the Federal Reserve, particularly over its reluctance to cut interest rates as aggressively as the administration has demanded. Fears that the independence of the US central bank is being eroded have unsettled investors.
While gold surged, the US dollar weakened against major currencies. Sterling rose nearly 0.5% to around $1.346, while the euro gained roughly 0.4% to $1.168.
Susannah Streeter, Chief Investment Strategist at Wealth Club, said Wall Street has been “rattled by what’s being viewed as another assault on the independence of the US Federal Reserve”. She noted that central bank independence is critical for maintaining credible monetary policy, particularly as scrutiny intensifies around the growing US debt burden.
Chris Beauchamp, Chief Market Analyst at IG, described the dispute as a “major crisis for markets”, warning that it could reignite concerns over the stability of the US dollar and the direction of US monetary policy.
Equity markets showed signs of strain. The UK’s FTSE 100, after a strong rally that recently saw it break above the 10,000 level for the first time, was broadly flat by mid-morning at around 10,123 points.
Among notable movers, Barclays shares fell about 2.5%, pressured by renewed focus on President Trump’s proposal to cap US credit card interest rates at 10% for one year. Barclays is one of the largest credit card issuers in the US.
Russ Mould, Investment Director at AJ Bell, cautioned that while consumers would welcome lower borrowing costs, such a cap would likely require Congressional approval. He also warned of potential unintended consequences, including reduced credit availability if lenders’ profitability were squeezed.
As confidence in institutions comes under strain, gold’s role as a monetary anchor and hedge against political risk continues to strengthen — a trend that remains firmly in focus for FirstGold investors.
