Gold jumps to new historic highs
Gold prices rose on Monday at the start of the week's trading to reach an all-time high of nearly $4,600 per ounce, driven by growing concerns in global markets amid political pressure on the US Federal Reserve and geopolitical escalation in the Middle East.
This sharp rise comes amid declining confidence in the independence of US monetary policy, coinciding with growing expectations that the Federal Reserve will cut interest rates at a faster pace, following the release of weak US labor market data.
Political pressure on the Fed raises demand for gold
Reports of a US Department of Justice investigation into Federal Reserve Chairman Jerome Powell have caused panic in the markets, especially after Powell confirmed that the investigation is related to a $2.5 billion renovation project for the Fed's headquarters, but essentially reflects a conflict over the White House's attempts to influence interest rate decisions.
In public statements, Powell stressed that monetary policy should be based on economic data rather than political pressure, raising investor concerns about direct political interference in interest rate decisions, which usually supports a rise in gold as a safe haven.
Trump and Powell increase market tension
Although US President Donald Trump denied any direct involvement, he continued to criticize Jerome Powell, describing him as incompetent in managing monetary policy and the Fed's infrastructure projects, which contributed to increased market volatility and higher demand for safe assets.
Tensions in Iran boost gold and silver gains
On the geopolitical front, concerns increased after a human rights organization announced that unrest in Iran had led to the deaths of more than 500 people, while Tehran threatened to target US military bases if Washington carried out its threats to intervene.
These developments come at a time when Trump is taking a more hardline approach on the international stage, following the ouster of Venezuelan President Nicolas Maduro and discussions about annexing Greenland, which has increased global uncertainty.
Silver follows gold and hits record highs
The rise was not limited to gold, as silver prices also rose to record highs of around $84.50 per ounce, supported by increased demand for safe havens amid concerns about the independence of the Federal Reserve and escalating tensions in Iran, as well as the European Union's concern about the US's next steps regarding Greenland.
Why are gold prices rising now?
These developments indicate that markets are facing a dangerous combination of political and economic risks, from pressure on US monetary policy to global geopolitical tensions, which is reinforcing investors' preference for gold and silver as hedging and value preservation instruments.
Gold and silver are attempting to reach our targets, as we indicated in our weekly metals analysis video here
