Trump Investigation Into Fed Chair Sends Gold to Record Territory

TLDR

• Gold traded near record highs at $4,596 an ounce on Tuesday following a 2% jump in the previous session
• The Trump administration opened a criminal investigation into Fed Chair Jerome Powell, serving grand jury subpoenas over testimony about Fed headquarters renovation
• Powell stated the investigation is a pretext to pressure the Fed on interest rate policy and reaffirmed the central bank’s independence
• Citigroup forecasts gold will reach $5,000 an ounce and silver will hit $100 an ounce within the next three months
• Markets awaited US Consumer Price Index data due Tuesday for signals on potential Fed rate cuts in 2026

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Gold prices remained close to all-time highs on Tuesday as investors responded to unprecedented political pressure on the Federal Reserve. Spot gold traded at $4,596 an ounce after surging 2% in the previous session.

Micro Gold Futures,Feb-2026 (MGC=F)

The Trump administration served Fed Chair Jerome Powell with grand jury subpoenas and opened a criminal investigation into his June congressional testimony. The probe centers on statements Powell made about a renovation project at the Fed’s headquarters building.

Powell issued a public statement calling the subpoenas and threats of criminal indictment “pretexts” for pressuring the central bank. He said the actions were part of ongoing attempts to influence the Fed’s interest rate policy.

The Fed chair reaffirmed the central bank’s commitment to setting policy based on economic conditions rather than political influence. Treasury Secretary Scott Bessent and Republican lawmakers warned Trump that the investigation could harm financial markets.

President Trump has made aggressive calls for lower interest rates since taking office. His tenure as Fed chair ends in May 2026, creating uncertainty about the future direction of US monetary policy.

Political Pressure Drives Safe-Haven Demand

The Department of Justice probe triggered what traders call the “sell America” trade on Monday. The dollar dropped while Treasury bonds sold off across different maturity dates.

Investors moved into gold as protection against political and fiscal shocks. BNP Paribas strategist David Wilson said uncertainty about Fed independence will remain a key driver for gold markets through much of 2026.

Gold reached multiple record highs in 2025 amid attacks on the Fed. Trade tensions, geopolitical risks, and central bank purchases also supported prices throughout the year.

Trump’s recent actions have extended this momentum into 2026. The president seized control of Venezuela’s government, threatened to take Greenland, and renewed his campaign against Powell.

Geopolitical Tensions Add to Market Pressure

Anti-government protests in Iran drew warnings from the US about possible intervention. The unrest raised concerns about broader regional instability in the Middle East.

ING analysts noted that tensions in Iran keep geopolitical risks elevated. These factors continue to support haven flows into precious metals like gold.

Silver prices hit record levels on Monday at $86.22 an ounce before settling at $84.94 on Tuesday. The metal experienced a historic short squeeze in late 2025 that drove prices to successive highs in December.

Platinum gained over 3% on Monday before falling 1.4% to $2,310.09 an ounce on Tuesday. Copper prices remained near all-time highs touched last week.

Analyst Forecasts and Market Outlook

Citigroup predicts gold will reach $5,000 an ounce within three months. The bank also forecasts silver will climb to $100 an ounce during the same period.

Saxo Bank strategist Ole Hansen said speculative flows are driving much of the current activity. Momentum-oriented traders chase strength on the way up but quickly cut positions when prices reverse.

CME Group announced changes to how it sets margins for precious metals futures. The new approach will calculate margins as a percentage of notional value rather than a dollar amount, taking effect from Tuesday’s close.

Markets awaited US Consumer Price Index data due Tuesday for fresh signals on potential Fed rate cuts in 2026.

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