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Gold and Silver Storm to Records as Fed Hit With DOJ Subpoenas - BLOOMBERG
(Bloomberg) -- Gold and silver climbed to records in a broad-based metals rally as the US Justice Department threatened the Federal Reserve with a criminal indictment, reviving concerns about the central bank’s independence.
The yellow metal spiked above $4,600 an ounce, while silver surpassed $86 after Fed Chair Jerome Powell said the potential indictment comes amid “threats and ongoing pressure” by the administration to influence interest-rate decisions. The dollar weakened and US 10-year Treasury yields edged higher.
Shares of mining companies also rose. Hochschild Mining Plc rose as much as 9.6% while silver miner Industrias Penoles SAB de CV jumped as much as 12%.
Repeated attacks on the Fed by the Trump administration were a major factor propelling gold and silver to successive peaks last year, and that driver looks set to persist. Weakening the institution’s ability to rein in inflation would weigh on the dollar and Treasuries, highlighting the appeal of precious metals as a store of value.
A potentially bigger risk to the Fed comes on Jan. 21 when the Supreme Court hears oral arguments in the case against Fed Governor Lisa Cook, strategists at Wells Fargo said. They expected a much stronger reaction, with a possible 2% decline in the dollar if the court sides with the Trump administration, which has attempted to fire Cook. That’d be positive for bullion as it’s priced in the US currency.
“We see increased interference with the Fed as a key bullish wildcard for the precious metals in 2026,” said Julius Baer Group Ltd.’s Carsten Menke. The silver market, smaller in size, is more sensitive to moves in rates and the dollar, so it’s “likely to react more strongly to such concerns,” he added.
Precious metals are being driven higher by a confluence of tailwinds, including falling US rates, heightened geopolitical tensions and a perception that the US will slacken its efforts to manage inflation. More than a dozen money managers said they’ve opted not to take too much money off the table in gold, holding conviction in its long-term appeal.
The possible Fed indictment “is a reminder of how many uncertainties markets are juggling — geopolitics, the growth/rates debate, and now a fresh headline-driven reminder of an institutional risk premium,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.
