Gold and silver prices are climbing in response to concerns around geopolitical issues and policy independence at the Federal Reserve.
Fed Chair Jerome Powell said late Sunday that the Department of Justice had served the central bank with subpoenas related to cost overruns for an overhaul of the bank’s headquarters. Protests in Iran, plus the U.S.’s effort to block oil exports from Venezuela, are another worry.
In response, continuous-contract gold futures were up 2.1% early Monday, climbing to a record high of $4,593.60 an ounce. Silver futures rallied to a record of $84.29 per ounce, for a gain of 6.2%.
Precious-metals miners were on a tear. In premarket trading, Newmont was up 2.8% and Barrick Mining rallied by 3.1%.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said in a video released Sunday evening.
Carsten Menke, head of next-generation research at Julius Baer, said Powell appears to see the subpoenas as a way for President Donald Trump to put more pressure on the central bank because he isn’t satifisfied with monetary policy, threatening the central bank’s independence. “The precious metal markets agree with his assessment,” Menke said. “Gold and silver prices are up.”
Elsewhere, traders are continuing to monitor U.S. actions in Venezuela and mounting unrest in Iran, where hundreds of people have been killed in protests against the government.
The U.S. dollar, measured against a basket of other currencies, was down 0.4%, and the yield on 10-year Treasury debt was up slightly to 4.2%.
With Powell’s term as Fed chair ending in May, attention is now turning to whether his successor will maintain policy autonomy or operate in lockstep with the administration. Continuing doubts about the central bank’s independence could drive additional demand for haven assets, which would lift precious metals prices even higher.
Write to Alex Kozul-Wright at alexander.kozul-wright@barrons.com
