Gold and silver soar after US targets Federal Reserve in Powell probe

Markets in Europe showed little movement on Monday after a broad rally in Asia.

US futures dipped, meanwhile, after Federal Reserve Chair Jerome Powell said the Department of Justice had served the central bank with subpoenas.

Powell noted that the threat of a criminal indictment relates to his testimony about the Fed’s building renovations.

President Donald Trump insisted that he did not “know anything” about the investigation that escalates a nearly year-long feud between the government and the central bank.

When asked by NBC if the probe is intended to pressure Powell on rates, Trump said: “No. I wouldn’t even think of doing it that way.”

Trump has nonetheless criticised the $2.5 billion (€2.13bn) renovation of two Fed office buildings as excessive.

Markets appeared to take the news in their stride, although gold and other safe-haven assets climbed.

Gold vaulted over $4,600 an ounce, shooting up over 2.5%, and silver approached $85 for the first time, rising over 7%. Copper futures in the US jumped by 2.52% to $6.051.

Powell’s term as chair ends in May, and Trump administration officials have signalled that he could name a potential replacement this month. Trump has also sought to fire Fed governor Lisa Cook, another move that chips away at central bank independence.

Gold’s rise is also linked to unrest in Iran as nationwide demonstrations against leader Ayatollah Ali Khamenei enter a third week. More than 500 people have been killed during the demonstrations, according to the US-based Human Rights Activists News Agency, including 490 protesters.

President Trump said that he intends to intervene in the country if the Iranian government continues to kill protestors.

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Futures for the S&P 500 dipped by 0.53% a few hours before daily trading started on Wall Street.

Futures for the Dow Jones Industrial Average fell 0.67%, while the Nasdaq composite index slipped 0.71% in pre-market trading.

Last Friday, US stocks hit records following a mixed report on the US job market. The data may delay another cut to interest rates by the Federal Reserve but does not entirely rule out the possibility.

The S&P 500 climbed 0.65% to 6,966.28, topping its prior all-time high set earlier in the week. The Dow Jones Industrial Average added 0.5% to 49,504.07 and likewise set a record. The Nasdaq composite led the market with a 0.8% gain, closing at 23,671.35.

The US Labor Department said employers hired fewer workers during December than economists expected, though the unemployment rate improved and was better than expected. An update on US inflation at the consumer level is due Tuesday, followed by a report on wholesale prices on Wednesday.

In other dealings early Monday, the dollar fell to 157.8180 Japanese yen, a daily drop of less than 0.1%. The euro climbed to $1.1691, a 0.49% rise.

US benchmark crude oil gave up early gains, falling to $58.91 per barrel. Brent crude, the international standard, dropped to $63.18 per barrel.

In Germany, the DAX was nearly flat at 25,358.17, while France’s CAC 40 also showed modest movements, coming to 8,359.71 by mid-afternoon. Britain’s FTSE 100 edged less than 0.1% higher, to 10,127.05.

In Asian trading, Hong Kong’s Hang Seng gained 1.44% to 26,608.48, while the Shanghai Composite index jumped 1.09% to 4,165.29 after reports that Chinese leaders were preparing additional support for the economy.

In South Korea, the Kospi added 0.84% to 4,624.79 while Australia’s S&P/ASX 200 gained 0.48% to 8,759.40. Taiwan’s Taiex gained 0.92%.