The US dollar weakened, while US equity futures declined and gold surged on Monday after Federal Reserve Chair Jerome Powell said that the administration of President Donald Trump had threatened him with criminal charges related to renovation work at the central bank’s headquarters.

The development triggered unprecedented concerns over the independence of the Federal Reserve from political influence, adding further strain to a volatile start to 2026, which has already seen the United States arrest Venezuelan president Nicolás Maduro and an escalation in rhetoric around potential control over Greenland.

S&P 500 futures fell by more than 0.5%, while gold — a traditional safe haven used to hedge against turmoil and inflation — climbed to a fresh record high, as markets priced in a slightly higher probability of US interest rate cuts in the near term.

European markets opened around 0.2% lower from record levels. The Swiss franc, another traditional safe haven, rose 0.6% to 0.796 against the dollar, while the euro gained 0.4% to $1.168.

Lee Hardman, market analyst at MUFG, said that “this latest development represents a significant escalation in the conflict between President Trump and Fed Chair Powell,” adding that “repeated attacks on the Federal Reserve’s independence continue to pose downside risks to the dollar.”

Federal funds futures added around three basis points of additional rate cuts priced in for this year. While modest, the move signals a risk that the central bank could be pushed toward a more accommodative policy stance.

Gold rose to a new record above $4,600 per ounce, also supported by rising geopolitical tensions surrounding Iran, while oil prices showed little reaction.

Trump said on Sunday that he was considering a range of strong responses, including military options, to the violent suppression of protests in Iran, which represent one of the biggest challenges to the country’s clerical establishment since the 1979 Islamic Revolution.

Iranian Foreign Minister Abbas Araghchi said on Monday, in comments translated into English, that the situation was “fully under control.”

Brent crude futures slipped 9 cents to settle just above $63 per barrel in early London trading, while US West Texas Intermediate fell 10 cents to $59.02 per barrel.

Both benchmarks had risen more than 3% last week, marking their strongest weekly gains since October, as Iran’s ruling authorities intensified crackdowns on protesters.

Despite a recent risk premium forming in oil markets, investors are still downplaying the threat of broader disruption, even though a wider conflict could affect the Strait of Hormuz, according to Saul Kavonic, head of energy research at MST Marquee.

“The market is saying: show me actual supply disruption before reacting in a meaningful way,” Kavonic said.

The second full week of the year is set to feature US inflation data, Chinese trade figures, and the start of the US corporate earnings season, led by JPMorgan Chase and Bank of New York Mellon on Tuesday. However, traders appeared to view these events as secondary for now.

Powell responded to the Trump administration’s threat of criminal charges by describing the move as a “pretext” aimed at pressuring the central bank to cut interest rates.

In a statement, Powell, whose term ends in May, said that “this unprecedented action must be viewed in the broader context of ongoing threats and sustained pressure from the administration.”

Economists said the developments mark a dramatic escalation in the conflict between Powell and Trump, which dates back to Powell’s early years as Fed chair starting in 2018.

Andrew Lilley, chief interest rate strategist at Barinque Investment Bank in Sydney, said: “Trump is pulling at the remaining threads of central bank independence.”

He added: “Investors won’t welcome this, but it actually shows that Trump has few tools left to apply pressure. Interest rates will remain where the majority of Federal Open Market Committee members want them.”

The dollar was the biggest loser, falling even against currencies that typically weaken during periods of risk, such as the Australian and New Zealand dollars. The Dollar Index slipped 0.4% in European trading, on track for its largest daily decline since mid-December.

The dollar ended 2025 on a weak footing, down more than 9% against major currencies, reflecting narrower interest rate differentials following Federal Reserve rate cuts, alongside growing concerns over the US fiscal deficit and political uncertainty.

Ray Attrill, head of currency strategy at National Australia Bank, said: “This open war between the Federal Reserve and the US administration certainly does not paint a positive picture for the US dollar.”

Silver prices surged in the European market on Monday to a new all-time high, extending gains for a second consecutive session, supported by the current decline in the US dollar, which is under heavy pressure amid escalating concerns over the independence of the Federal Reserve, especially after the US Department of Justice opened a criminal investigation into Chairman Jerome Powell.

This record rally was also driven by strong safe-haven demand for the metal, as global geopolitical risks intensify, particularly following US threats of potential military strikes against Iran.

Price Overview

• Silver prices today: Silver jumped 5.9% to $84.61 per ounce, an all-time high, from an opening level of $79.91, which also marked the session low.

• At Friday’s settlement, silver gained 3.8%, recording its first daily advance in three sessions, supported by renewed buying from retail investors.

• The white metal posted weekly gains of 9.75% last week, marking its first weekly rise in 2026, driven by strong demand for precious metals amid rising global geopolitical risks.

US Dollar

The US Dollar Index fell 0.45% on Monday, pulling away from a four-week high and heading toward its first loss in five sessions, reflecting broad-based weakness in the US currency against a basket of global currencies.

As is well known, a weaker US dollar makes dollar-priced commodities and metals more attractive to buyers holding other currencies.

Beyond profit-taking, the dollar’s decline reflects renewed concerns over the stability of the Federal Reserve, the world’s largest central bank, after US prosecutors launched an official criminal investigation into Chairman Jerome Powell.

The US Department of Justice opening a criminal investigation into the Federal Reserve chair is seen as an unprecedented step in US history, severely undermining confidence in the independence of US monetary policy.

Analysts warn that the investigation, which reportedly relates to Powell’s past testimony, puts the stability of the global financial system at risk and threatens to fuel heightened volatility in financial markets in the period ahead.

For his part, Powell broke his silence by confirming that he is subject to the criminal investigation, delivering a sharply worded message to both authorities and markets, stressing that he will not succumb to what he described as intimidation attempts by the administration of President Donald Trump.

Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney, said that Powell appears to have grown weary of criticism from afar and is clearly moving onto the offensive. Attrill added that this open confrontation between the Federal Reserve and the US administration, if Powell’s remarks are taken seriously, is certainly not supportive of the US dollar.

Global Geopolitical Tensions

Iran has threatened to target US military bases in the Middle East if President Trump carries out his renewed threats to strike the country in support of protesters. A human rights organization reported on Sunday that unrest in Iran has resulted in more than 500 deaths.

These developments come as Trump projects US power globally, following the ouster of Venezuelan president Nicolás Maduro and discussions over the possible annexation of Greenland through purchase or force.

Gold prices rose in European trading on Monday, extending gains for a third consecutive day and beginning a new phase of record-breaking momentum, after surpassing the $4,600-per-ounce level for the first time ever.

The rally was supported by the current pullback in the US dollar, which has come under heavy pressure amid mounting concerns over the independence of the Federal Reserve, especially after the US Department of Justice opened a criminal investigation into Chairman Jerome Powell.

The historic surge has also been fueled by safe-haven demand for the metal, amid rising global geopolitical risks, particularly following US threats to carry out military strikes against Iran.

Price Overview

• Gold prices today: Gold jumped by more than 2.0% to $4,601.26 per ounce, marking an all-time high, from an opening level of $4,509.14, with the session low also recorded at $4,509.14.

• At Friday’s settlement, the precious metal gained 0.75%, posting a second consecutive daily advance amid escalating global geopolitical tensions.

• Gold prices rose 4.1% last week, marking the first weekly gain of 2026, driven by strong safe-haven demand.

US Dollar

The dollar index fell about 0.3% on Monday, retreating from a four-week high and heading toward its first loss in five sessions, reflecting a broad decline in the US currency against a basket of global peers.

As is well known, a weaker US dollar makes dollar-denominated gold bullion more attractive to holders of other currencies.

Beyond profit-taking, the dollar has come under renewed pressure due to growing concerns over the stability of the Federal Reserve, after US prosecutors formally launched a criminal investigation into Chairman Jerome Powell.

The US Justice Department’s decision to open a criminal probe into a sitting Federal Reserve chair is unprecedented in US history and has severely undermined confidence in the independence of US monetary policy.

Analysts argue that the investigation, which reportedly centers on Powell’s past testimony, puts global financial system stability at risk and threatens to accelerate market volatility in the period ahead.

For his part, Jerome Powell broke his silence, confirming that he is subject to the criminal investigation and delivering a forceful message to both authorities and markets, stressing that he will not yield to what he described as intimidation attempts by the administration of President Donald Trump.

Ray Attrill, head of FX strategy at National Australia Bank in Sydney, said Powell appears to be tired of criticism from afar and is clearly moving onto the offensive. Attrill added that this open confrontation between the Federal Reserve and the US administration, if Powell’s remarks are taken at face value, is certainly not supportive of the US dollar.

Global Geopolitical Tensions

Iran threatened to target US military bases in the Middle East if President Donald Trump follows through on renewed threats to strike the country in support of protesters. A human rights organization reported on Sunday that unrest in Iran has resulted in more than 500 deaths.

These developments come as Trump projects US power globally, following the removal of Venezuelan President Nicolás Maduro and discussions over acquiring Greenland by purchase or force.

Gold Outlook

Kelvin Wong, Asia-Pacific market analyst at OANDA, said that fundamentally, geopolitical risk is the dominant factor influencing metals prices and is the primary driver behind the strong upside momentum seen in gold and silver today.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.57 metric tons on Friday, bringing total holdings down to 1,064.56 metric tons, the lowest level since December 22.

The euro rose in European trading on Monday against a basket of global currencies, beginning a recovery from a four-week low versus the US dollar and heading toward its first gain in five days. The move was supported by bargain buying from lower levels, alongside growing downside pressure on the US currency amid escalating concerns over the independence of the Federal Reserve, particularly after the US Department of Justice opened a criminal investigation into Chairman Jerome Powell.

With inflationary pressures easing for policymakers at the European Central Bank, expectations for at least one European interest rate cut this year have strengthened. To reprice these expectations, investors are awaiting further key economic data from the euro area.

Price Overview

• Euro today: The euro rose 0.3% against the dollar to 1.1671, from an opening level of 1.1634, after touching a session low at 1.1622.

• The euro ended Friday down 0.2% versus the dollar, marking a fourth consecutive daily loss, after hitting a four-week low at 1.1618, following stronger-than-expected US labor market data.

• Last week, the euro lost 0.75% against the dollar, its second straight weekly decline, amid rising bets on an interest rate cut in Europe this year.

US Dollar

The dollar index fell about 0.3% on Monday, retreating from a four-week high and heading toward its first loss in five sessions, reflecting a broad pullback in the US currency against a basket of global peers.

Beyond profit-taking, the dollar weakened amid renewed concerns over the stability of the Federal Reserve, after US prosecutors formally opened a criminal investigation into Chairman Jerome Powell.

The US Justice Department’s decision to launch a criminal probe into a sitting Federal Reserve chair is unprecedented in US history and has shaken confidence in the independence of US monetary policy.

Analysts argue that the investigation, reportedly related to Powell’s past testimony, puts global financial system stability at risk and threatens to increase market volatility in the period ahead.

For his part, Jerome Powell broke his silence, confirming that he is subject to the criminal investigation and delivering a forceful message to authorities and markets alike, stressing that he will not yield to what he described as intimidation attempts by the Trump administration.

Ray Attrill, head of FX strategy at National Australia Bank in Sydney, said Powell appears to be tired of criticism from a distance and is clearly moving onto the offensive. Attrill added that this open confrontation between the Federal Reserve and the US administration, if Powell’s remarks are taken at face value, is certainly not supportive of the US dollar.

European Interest Rates

• Data released last week showed a slowdown in headline inflation across Europe in December, pointing to easing inflationary pressures at the European Central Bank.

• Following those data, money market pricing for a 25-basis-point rate cut by the ECB in February rose from 10% to 25%.

• Traders adjusted expectations from rates remaining unchanged throughout the year to at least one 25-basis-point cut.

• To reprice these expectations further, investors are awaiting additional euro area data on inflation, unemployment, and wages.