Gold prices surge to fresh high over concerns about Iran crisis and Fed independence

🗝️ Key Points

• Gold prices hit a fresh high on Monday morning, as concerns about geopolitical uncertainty and the independence of the US Federal Reserve fuelled safe-haven demand.
• Gold futures (GC=F) jumped 2% to $4,592.90 per ounce at the time of writing, while spot gold surged 1.6% to $4,582.55.
• Hundreds have reportedly been killed in anti-government protests in Iran, as the nationwide demonstrations enter a third week.

Gold prices hit a fresh high on Monday morning, as concerns about geopolitical uncertainty and the independence of the US Federal Reserve fuelled safe-haven demand.

Gold futures (GC=F) jumped 2% to $4,592.90 per ounce at the time of writing, while spot gold surged 1.6% to $4,582.55.

Hundreds have reportedly been killed in anti-government protests in Iran, as the nationwide demonstrations enter a third week. President Donald Trump said on Sunday that the US was considering “some very strong options” in Iran.

In addition to heightened geopolitical tensions, there are also growing concerns about the independence of the US central bank, with the news that a criminal probe had been opened into Fed chair Jerome Powell.

Read more: Should you invest in gold?

Powell revealed on Sunday that that the Justice Department served the central bank with grand jury subpoenas, threatening a criminal indictment related to Powell’s testimony before the US Senate.

“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” Powell said in a recorded video.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said that a “a cocktail of geopolitical tension and questions over Federal Reserve independence sent investors flocking to safety”.

“Escalating rhetoric between Iran and the US, alongside revelations that chair Powell faced threats from the White House over past decisions, heightened the sense of political risk,” he said. “A softer US jobs print on Friday added fuel to the gold trade, with traders leaning into expectations of two rate cuts this year ahead of a pivotal inflation report later this week.”

The pound rose 0.4% against the dollar (GBPUSD=X) on Monday morning, to trade at $1.3457 at the time of writing, as the greenback weakened following news of the Fed investigation.

The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six currencies, was down 0.4% to 98.74 at the time of writing.

Francesco Pesole, FX strategist at ING, said: “Powell has explicitly characterised this as an attack on the Fed’s independence from the Trump administration. Markets’ initial reaction agreed with that view. The combined drop in the dollar, equities and treasuries was a reminiscence of the “sell America” days of last spring.”

Read more: Stocks slip as DOJ opens criminal probe into Fed chair

“Expect developments on this story to take over other macro drivers for the dollar, at least for today,” he said. “The downside risks for the dollar from any indications of further determination to interfere with the Fed’s independence are substantial.”

In other currency moves, the pound was little changed against the euro (GBPEUR=X) on Friday morning, trading at €1.1506 at the time of writing.

Oil prices dipped on Monday, amid continued concerns about oversupply in the market this year.

Brent crude (BZ=F) futures were down 0.4% to $63.08 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) fell by the same margin to $58.86 a barrel.

According to a Reuters report, Goldman Sachs (GS) expects lower oil prices this year, as supply swells in the market.

More broadly, the FTSE 100 (^FTSE) was muted in early European trading, at 10,121 points. For more details on market movements check our live coverage here.

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