Gold and silver hit record highs this week. Precious metals are being buoyed by fears over the war between Donald Trump and the Federal Reserve, which reached new heights after Jerome Powell was subpoenaed.
Tensions between the Fed and Donald Trump shake precious metals markets
Tensions between the Federal Reserve and Donald Trump have existed since the start of the US president’s second term. But this week, the war reached a new stage: Jerome Powell received a subpoena and is facing possible criminal charges. The Fed chairman has claimed that these proceedings are merely a pretext and that their sole purpose is to weaken an institution that the president cannot control. Faced with these threats to the country’s stability, the precious metals markets have reacted. The price of a 5,000-ounce gold bar reached $8,629 yesterday, an all-time high. This represents an 8% increase in just a few hours. As a reminder, the precious metal has been setting records for several months, and geopolitical tensions have only accentuated the trend:
The trend is the same for gold. The yellow metal has also seen a surge since January 11. It hit an all-time high of $4,630 per ounce, after jumping 2.7%. Gold has also been setting records in recent months.
Impact on other markets
Bitcoin, sometimes referred to as “digital gold,” has not enjoyed the same enthusiasm. The price of the cryptocurrency fell 1.1% over the week. Wall Street is also hesitant: the Nasdaq closed up 0.08% yesterday. As for the S&P 500, it was up 0.16% at the end of the day yesterday. The CAC 40 also seems hesitant: the French index was down 0.29% around 11 a.m. The same scenario applies to the German DAX (-0.14%) and the British FTSE (+0.05%).
In May, the chairman of the Federal Reserve is expected to step down. Donald Trump already has a replacement in mind, as he wants to have more control over the regulatory body, which is supposed to be independent. But this move could be risky for the US president. Dissenting voices have been heard among Republicans, who fear financial destabilization.
Furthermore, according to Bloomberg, international central banks are working on a joint statement to support the Federal Reserve chairman. The Bank for International Settlements (BIS) is said to be leading this initiative, which would further widen the gap between the US economy and the rest of the world.
