Summarised by Centrist
The spot price of gold, which is the current market price for immediate delivery rather than a future contract, rose more than 2 per cent on January 12, briefly hitting a record of about US$4,626 an ounce.
Meanwhile, silver surged more than 6 per cent to above US$85.
The rally coincided with falling share markets and the sharpest drop in the US dollar in three weeks, a sign that investors were nervous about the wider economy, not just trading commodities.
Investor anxiety intensified after widespread media reports that the US Department of Justice had served the Federal Reserve with grand jury subpoenas and threatened to indict Fed chair Jerome Powell over past congressional testimony.
Donald Trump also renewed attacks on the central bank for failing to cut rates more aggressively.
“The dollar sold off across the board as the Fed received DOJ subpoenas, reigniting both independence risks and a brief return of ‘sell-America’ trade,” analysts at ING wrote. “It’s wait-and-see mode now as markets try to assess the effective implications of all this.”
British trader Vince Stanzione, of First Information, argued the current bull market dates back to 2022, when Western governments froze Russian assets, signalling that reserves held within the financial system could be subject to political decisions. “Gold held in a central bank vault has no counterparty risk,” he said.
“Remember, it’s not gold going up, it’s the world currencies going down,” he said.
