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Gold hits record as investors seek shelter from Trump’s war on the Fed

January 14, 2026

Donald Trump’s escalating confrontation with the US central bank has sent shockwaves through global markets, driving gold to a fresh all-time high as investors sought refuge from mounting political risk in the world’s largest economy.

Gold surged to around $4,600 an ounce on Monday, while silver moved close to record territory, as fears grew over political interference in the independence of the Federal Reserve. The US dollar weakened sharply, with the dollar index falling 0.32 per cent against a basket of major currencies.

The flight to safe-haven assets followed remarks by Jerome Powell, who said a criminal investigation into his conduct was part of an effort to intimidate the central bank and undermine its ability to set interest rates free from political pressure.

Despite the turmoil, Wall Street equities eked out modest gains. The S&P 500 rose 0.16 per cent, the Dow Jones Industrial Average added 0.17 per cent, and the Nasdaq climbed 0.26 per cent. Bond markets were more unsettled, with the yield on the benchmark 10-year US Treasury edging up to 4.18 per cent as investors questioned the long-term credibility of US monetary governance.

In the UK, the FTSE 100 finished slightly higher, while sterling strengthened to $1.34 against the dollar, reflecting the greenback’s broader weakness.

Market volatility increased sharply, with the VIX index recording its biggest rise since November, as investors absorbed the implications of an unprecedented standoff between the White House and the Fed.

Late on Sunday, Powell confirmed that the US Department of Justice had issued grand jury subpoenas linked to his testimony on a $2.5bn refurbishment of the Fed’s Washington headquarters. In a rare and direct public rebuke, he warned that the investigation raised fundamental questions about whether monetary policy would be shaped by economic evidence or political coercion.

In a joint statement, all living former Fed chairs, Alan Greenspan, Janet Yellen and Ben Bernanke, described the move as an “unprecedented attempt” to erode central bank independence, warning it resembled practices seen in emerging economies with weaker institutions.

Trump, who appointed Powell during his first term, denied direct involvement in the subpoena but renewed his criticism of the Fed chair’s leadership. He is expected to name a successor soon, with Kevin Hassett and Kevin Warsh widely seen as the leading contenders.

Economists warn the consequences could be profound. Analysts at Berenberg said that if political influence were to dictate monetary policy, the US could face a repeat of 1970s-style inflation, while ING and Nomura cautioned that continued pressure on the Fed would pose a sustained downside risk to the dollar.

For businesses and investors globally, the episode has revived a familiar lesson: when confidence in institutions wobbles, capital seeks safety. With US inflation still above target and political tensions intensifying, markets appear braced for further volatility in the months ahead.