The price of gold has surged to a fresh all-time high, breaking through the $4,600 (£3,415) per ounce barrier as a political storm over the independence of the US central bank spurs a flight to safety among investors.
Fed Crisis Fuels Safe-Haven Rush
On Monday, 12 January 2026, the precious metal jumped by approximately 2% in morning trading, eclipsing a previous peak set just weeks earlier in late December. This remarkable rally is directly linked to escalating concerns about political pressure on the US Federal Reserve.
The catalyst was a video statement from Fed Chairman Jerome Powell, who revealed the central bank faced a criminal indictment threat related to his testimony on office renovations. This represents a sharp intensification of President Donald Trump's criticism of the Fed for not cutting interest rates faster.
"The threat of criminal charges undermined the Fed’s role and questioned whether monetary policy will in future be directed by political pressure or intimidation," Mr Powell stated, sending shockwaves through financial markets.
Market Turbulence and Currency Shifts
The news immediately stoked fears about the erosion of central bank autonomy, a cornerstone of economic stability. Gold, a classic safe-haven asset, has now skyrocketed by around 70% over the past year, reflecting deep-seated anxiety over political and economic uncertainty.
As gold climbed, the US dollar weakened. The pound sterling gained nearly 0.5% against the dollar to 1.346, while the euro rose 0.4% to 1.168.
Susannah Streeter, chief investment strategist at Wealth Club, said Wall Street was "rattled by what’s being viewed as another assault on the independence of the US Federal Reserve." She warned the situation was "unnerving investors" at a time when scrutiny of US debt is mounting.
FTSE 100 Pauses and Barclays Stumbles
The ripple effects were felt in London. The FTSE 100 index stepped back after its recent record-breaking run, trading flat at around 10,123 points by mid-morning on Monday.
Barclays was among the biggest fallers, with its share price dropping about 2.5%. The bank was caught in the crossfire after President Trump called for a one-year cap of 10% on credit card interest rates, stating Americans were being "ripped off." Barclays is a major credit card issuer in the US.
Chris Beauchamp, chief market analyst at IG, summed up the mood, stating the dispute "represents a major crisis for markets" with the potential to reignite worries about the dollar and US monetary policy. The flight to gold underscores a market bracing for further turbulence.
