President Donald Trump has kicked off a criminal investigation into Federal Reserve boss Jerome Powell, sparking chaos in the markets. The US dollar plunged while gold prices surged, as tensions over the Fed’s independence took a nasty turn.
Dollar Falls as Gold Hits Record High
On Monday, the US dollar dropped 0.36% against major currencies. Meanwhile, gold prices jumped a staggering 1.9%, hitting an eye-watering record of $4,600 per troy ounce.
Silver, another safe-haven asset, also climbed sharply amid growing unease over inflation and fears the Fed is losing its autonomy.
Justice Dept Hits Fed with Grand Jury Subpoenas
The drama escalated last Friday when the US Justice Department served grand jury subpoenas on the Federal Reserve. The subpoenas targeted Powell’s June 2025 Senate testimony and Fed office renovation documents.
Powell fired back in a Sunday video, saying the probe is not about his testimony or Fed renovations but “about the Fed’s interest rate decisions being independent from presidential influence.”
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates on our best assessment of what will serve the public rather than following the preferences of the President,” Powell stated.
Experts Slam Trump’s Attack on Fed Independence
Neil Wilson, UK strategist at Saxo, called Trump’s move “truly unprecedented” and warned it sends a dangerous message that the White House could control interest rates.
Goldman Sachs chief economist Jan Hatzius echoed concerns at the 2026 Global Strategy conference, saying the probe “reinforced worries about the Fed’s independence being under fire.”
Still, Hatzius expressed confidence Powell would keep basing decisions on economic data alone.
Trump’s Ongoing Fed Feud
- In August, Trump unsuccessfully pushed to remove Fed governor Lisa Cook over alleged false mortgage statements.
- In September, he appointed an ally to the Federal Open Market Committee (FOMC) pushing for swifter, deeper rate cuts.
- Trump continues to mock Powell on Truth Social, dubbing him “Jerome ‘Too Late’ Powell” for cautious rate hikes.
- Powell’s current term ends in May, but the spat shows no signs of cooling.
