- Powell subpoena revives Fed independence fears
- Gold surges to record high, silver eyes breakout
- Setup echoes 2025 surge as credibility risk returns
Summary
History may be about to repeat. Fed independence fears drove gold and silver sharply higher in 2025, and the latest legal pressure on Powell has revived those same dynamics. Gold has already broken to fresh highs, silver is primed for a breakout, and technical signals favour buying dips and breakouts over fading strength. If political risk escalates further, metals could once again become the release valve for credibility concerns.
Fed Fears Return…
Federal Reserve Chairman Jerome Powell says the U.S. Department of Justice has issued the Fed with grand jury subpoenas tied to his June testimony on the renovation of the bank’s Washington D.C. headquarters, with the threat of a criminal indictment. Powell framed the building issue as a sideshow, making it clear the real fight is over whether the Fed sets policy based on evidence or bends to political pressure. In plain terms, this is an attempt to squeeze the chair at a moment when the White House wants faster rate cuts and lower longer‑dated Treasury yields.
…With Major Policy Implications
This matters because Powell’s term as chair ends in May, but he can legally stay on the Board until January 2028. If he remains, that denies the administration an extra governor seat. If he resigns or is forced out, Trump can slot a new governor and potentially keep Stephen Miran on as a full‑time member, adding to Christopher Waller and Michelle Bowman, who he appointed during his first presidential term.
It mirrors the move on Fed Governor Lisa Cook midway through last year, when Trump fired her on fraud allegations, with the legality of that dismissal set to begin being heard by the Supreme Court on 21 January. If her removal is ruled legal, Powell’s role becomes even more important because governors aren’t just permanent FOMC voters, but also sign off on regional Fed president appointments.
Dollar, Long Bonds Offered
Markets are reacting as you would expect to the latest round of Fed independence fears. The U.S. dollar has softened a touch, although the move has been limited given valuation concerns surrounding the euro and Japanese yen, which are the largest weightings in the U.S. dollar index (DXY) basket.
Source: TradingView
30-year Treasury futures have slipped, with the coiling pattern within a descending triangle pointing to the risk of a pronounced downside move over the short to medium term, especially with a ruling on the legality of Trump’s reciprocal import tariffs likely to arrive as soon as this week. While such an outcome is largely priced, according to prediction markets, if the ruling goes against the administration it adds to the risk of another sizeable increase in the U.S. primary budget deficit, something that risks a sharp lift in longer‑dated yields if tariff revenue has to be refunded and is no longer collected.
Source: TradingView
Shorter‑dated U.S. rate futures have nudged toward more cuts in 2026, reflecting the classic pattern when traders price a higher chance that policy will be influenced by politics rather than economic data, resulting in lower overnight rates than would otherwise have been the case.
While moves in rates and FX have been relatively contained so far, the precious‑metals space is doing the heavy lifting. Gold has taken out fresh highs and silver is back probing the late‑December peaks, acting as the release valve for renewed Fed fears. It mirrors what we saw in August last year when Trump first took aim at Lisa Cook and metals ripped higher as credibility risk sparked dollar weakness. If the legal and political pressure escalates from here, a repeat in 2026 is firmly on the cards.
Gold Hits Record Highs
Source: TradingView
Turning to technical assessment on gold first, you can see the price broke above the former record high of $4,550 set in late December on the latest Powell headlines. Sitting in multiple uptrends and with the 50‑ and 200‑day moving averages pointing north, the break provides yet another platform to set bullish trades around, allowing for a stop to be placed beneath $4,550 for protection against reversal. The price tagged $4,600 earlier in the session before partially retracing, making that the initial bullish target. Beyond, let the price action guide on when and if to cut, hold or reduce, especially around big figures given recent form.
Both RSI (14) and MACD are generating bullish momentum signals, favouring a similar bias when it comes to directional risks.
Silver Coiling. Breakout Imminent?
Source: TradingView
The technical picture for silver is not dissimilar to gold, coiling within an ascending triangle just beneath the December high of $83.97. If we see a break and close above that level, it may spark another leg of buying, providing a level where longs could be established above with a stop beneath for protection.
The momentum picture shows building topside strength with RSI (14) trending higher above 50 but not yet overbought on the dailies. MACD is confirming the bullish message, trending higher having crossed the signal line in positive territory all the way back in late November. Buying dips and breakouts is therefore preferred to selling into strength.
