(Bloomberg) — Gold steadied close to a record Tuesday as markets kept a close eye on the Trump administration’s renewed attacks on the Federal Reserve that have stoked concerns about its independence.
Bullion traded at about $4,596 an ounce after jumping 2% in the previous session as Powell said the potential indictment was a continuation of attempts to pressure the central bank. The latest attack on the Fed revived the “sell America” trade, with the dollar dropping on Monday and Treasuries selling off across the curve.
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President Donald Trump’s aggressive calls for lower interest rates have threatened to undermine the Fed’s ability to control inflation and contributed to the so-called debasement trade, where investors sell the dollar and other assets vulnerable to political and fiscal shocks. The Department of Justice probe into Powell prompted lawmakers from the president’s own Republican party and Treasury Secretary Scott Bessent to warn Trump the move could be bad for markets.
“With Powell’s tenure as Fed Chair due to end in May, uncertainty of Fed independence and the trajectory of US interest rates will in our view remain a key gold market driver for much of 2026,” David Wilson, director of commodities strategy at BNP Paribas SA, wrote in a note.
Attacks on the Fed helped propel gold to successive record highs last year, along with heightened trade and geopolitical risks and central-bank buying. With Trump seizing Venezuela’s leader, threatening to take Greenland and renewing his campaign against Powell, precious metals are carrying that momentum through to 2026.
“A large share of the activity is being driven by speculative flows, particularly momentum-oriented traders who chase strength on the way up but are equally quick to cut exposure when prices turn,” Ole Hansen, a strategist at Saxo Bank A/S, wrote in a text message.
Silver gained after erasing a 2% loss. The metal has been volatile amid a wave of speculative interest. Traders are expecting even more gyrations, as seen in the spike of the three-month implied volatility for options on the biggest silver exchange-traded fund.
Meanwhile, CME Group will change the way it sets margins for gold, silver, platinum and palladium futures after the surge in prices and volatile trading. The new approach will set margins based on a percentage of so-called notional — compared with a dollar amount basis previously — and will take effect from Tuesday’s close.
