Business
Gold jumps to record high on Fed subpoenas and Iran tensions
Bullion rose to just shy of $4,600 an ounce on Monday after Fed Chair Jerome Powell said the central bank had been served grand jury subpoenas from the Justice Department related to his June congressional testimony on renovations of the Fed’s headquarters. The move marked an escalation of President Donald Trump’s feud with Powell and also renewed worries over the independence of the monetary authority.
Deadly protests in Iran, meanwhile, increased the haven appeal of precious metals, with the possibility that the Islamic Republic could be overthrown injecting uncertainty into geopolitics and oil markets. Trump said Sunday he was mulling potential options on Iran, while also reiterating threats to take Greenland and questioning the value of the NATO alliance, just over a week after seizing Venezuelan leader Nicolas Maduro.
“It’s a reminder of how many uncertainties markets are juggling — geopolitics, the growth/rates debate, and now a fresh headline-driven reminder of an institutional risk premium,” said Charu Chanana, a strategist from Saxo Markets in Singapore.
Gold just emerged from a record-setting year, where almost every tailwind supporting the precious metal combined, from falling interest rates and heightened geopolitical tension, to lower trust in the US dollar. More than a dozen money managers said they’ve opted not to take too much money off the table, holding conviction in bullion’s long-term appeal.
Last week’s US jobs data left expectations for additional US interest-rate cuts intact, supporting non-yielding precious metals. The US employment report showed job growth was below forecasts last month, supporting bets the Federal Reserve will continue cutting borrowing costs to support the economy. Silver also traded just shy of a all-time peak.
Markets have priced in at least two cuts this year, after the Fed delivered three consecutive reductions in the second half, aiding gold which doesn’t pay interest. Gold rose 1.7% to $4,585.39 an ounce as of 9:08 a.m. Singapore time. The Bloomberg Dollar Spot Index dipped 0.2%. Silver jumped 4.6%, after surging nearly 10% last week. Palladium and platinum advanced.
The US Supreme Court, meanwhile failed to weigh in on Trump’s tariffs, setting Wednesday for the next opinion. A ruling against the levies would undercut his signature economy policy and deliver his biggest legal defeat since returning to the White House.
