Gold breaks through $4,600 to hit a new high! The Federal Reserve's "judicial gate" resonates with Iran's turmoil, and the king of safe-haven assets makes a comeback

Amidst the intertwined uncertainties of multiple markets, the precious metals market is ushering in a historic moment. On Monday Beijing time, spot gold prices temporarily broke through the $4,600 per ounce mark, hitting a record high; spot silver also surpassed its two-week high, continuing to set new records.

The core driving forces behind this round of market rally stem from a dual crisis: on one hand, the U.S. Department of Justice threatened criminal charges against the Federal Reserve, triggering deep concerns about the independence of the central bank and shaking the foundation of the dollar’s credibility; on the other hand, deadly protests within Iran continue to escalate, geopolitical risks soar, and the safe-haven attributes of precious metals are reinforced. Meanwhile, weak U.S. employment data solidified market expectations of at least two rate cuts by the Federal Reserve this year, providing macro liquidity support for zero-yield gold and silver. This bull market in precious metals, catalyzed by systemic risks, geopolitical turmoil, and shifting monetary policy expectations, signals that global markets are entering a new phase characterized by high volatility and high risk.

The “Independence Crisis” of the Federal Reserve: The Deep Logic Behind Gold Price Rise

Generally, short-term fluctuations in gold prices are directly related to geopolitical events or the dollar index trend. However, the record-breaking surge in gold prices early this week was primarily triggered by a more fundamental issue—the unprecedented challenge to the independence of the U.S. central bank. This event was sparked by Federal Reserve Chair Jerome Powell disclosing that the U.S. Department of Justice had issued a grand jury subpoena to the Fed regarding his June congressional testimony about the Fed headquarters renovation. Market consensus views this as an escalation of ongoing pressure from the previous Trump administration on the Fed, with the ultimate goal of influencing the central bank’s interest rate decisions.

This incident is not an isolated administrative friction. Over the past year, the Trump administration repeatedly criticized the Fed’s monetary policy, demanding faster and larger rate cuts to support economic growth. Now, the use of criminal investigation threats undoubtedly institutionalizes and sharpens political pressure. For markets, the independence of the central bank is a core safeguard of monetary policy and credit value. When this independence is eroded, confidence in the long-term value of fiat currencies—especially the dollar—begins to waver. As a non-sovereign, counterparty-risk-free store of value, gold’s appeal is sharply magnified in this environment. It is not just a safe haven but also a hedge against potential systemic risks. Senior analysts point out that current gold prices already incorporate a significant “systemic risk premium,” providing additional upside beyond traditional analysis frameworks.

From a macro liquidity perspective, concerns over Fed independence resonate with market expectations of rate cuts. Last week’s U.S. non-farm payroll data showed lower-than-expected December employment growth, and although the unemployment rate declined, indicating the labor market is not deteriorating rapidly, the overall trend reinforced expectations of economic slowdown. Currently, the futures market has fully priced in at least two rate cuts by the Fed this year. If the Fed is forced to accelerate or deepen its rate-cutting pace under political pressure, it would mean a more accommodative monetary environment and further decline in real interest rates, which is highly favorable for non-yielding assets like gold. Therefore, this “judicial subpoena” event, like a stone stirring a thousand waves, has injected strong momentum into the gold bull market from both “credit risk” and “liquidity expectation” dimensions.

Key Market Data for Gold and Major Precious Metals

• Spot Gold: peaked at $4,600.33/oz, intraday increase of 1.7%, closing around $4,585.39.
• Spot Silver: surged 4.6% intraday, approaching its all-time high, with nearly 10% gain last week.
• Spot Platinum: up about 3%, currently trading around $2,345.40/oz.
• Spot Palladium: up 3.3%, price reaching $1,875.68/oz.

Geopolitical “Powder Keg” Continues to Explode, Safe-Haven Demand Unbounded

If the crisis over Fed independence has shaken the internal foundation of the financial system, then the geopolitical tensions erupting in multiple hotspots worldwide externally provide nearly “unlimited” safe-haven buying for the precious metals market. The main “flashpoint” in this rally comes from Iran, a major Middle Eastern country. According to human rights reports, the death toll from domestic protests has exceeded 500, with the situation worsening. What further tightens market nerves is former U.S. President Trump’s public statement on Sunday that he is considering “potential options” against Iran to support protesters. This has sparked serious concerns about an escalation of U.S.-Iran confrontation, with Iran threatening to strike U.S. military bases in retaliation.

This geopolitical risk is not isolated but exhibits “linkage” and “concurrency.” Less than two weeks ago, the Trump administration led an operation to detain Venezuelan leader Nicolás Maduro. Additionally, comments about “purchasing or forcibly acquiring Greenland” and public questioning of NATO’s value send a clear signal: the global geopolitical landscape is in a state of high instability and unpredictability. For investors, this environment’s uncertainty is systemic, affecting not only regional security but also potentially disrupting global energy markets (especially oil), supply chains, and triggering sudden capital flows reversals.

In such a complex risk landscape, traditional safe-haven assets like U.S. Treasuries and the dollar may diverge in performance. Although the dollar is often seen as a safe-haven currency, its value is closely tied to U.S. political stability and policy predictability. Current political infighting may weaken its safe-haven attributes. Gold and silver, due to their physical properties and recognized status as “hard currencies,” become more pure tools for hedging geopolitical “black swan” events. Especially silver, with its lower price and higher volatility compared to gold, tends to attract more speculative and safe-haven capital during sharp risk sentiment surges, often outperforming gold, as demonstrated this week. This synchronized surge in precious metals reflects the market’s re-pricing of global security and political risks.

Silver: The Undervalued “Dual-Drive” Star, How Far Can the Bull Market Go?

In this broad rally of precious metals, silver’s performance has been particularly dazzling, with single-day gains far exceeding gold and approaching its all-time high. This reveals the unique “dual-drive” logic of the silver market: it is not only an important member of the safe-haven family but also a key industrial metal. Currently, both attributes are in strong tailwinds.

From a precious metals perspective, silver benefits from all the macro and geopolitical positives mentioned: rate cut expectations, dollar weakening, and surging safe-haven demand. Due to its lower price and smaller market size, the same capital inflow can produce larger percentage price swings, making silver often the “leading edge” and “amplifier” in the bull market. From an industrial demand outlook, silver’s prospects are extremely bright. It is an indispensable raw material for photovoltaic solar panels, 5G equipment, electric vehicles, and other green energy and high-tech sectors. The global green energy transition wave is creating structural, long-term demand growth for silver.

However, supply cannot keep pace with demand expansion. The silver market has long suffered from structural shortages, with most supply coming as a byproduct of lead, zinc, copper, and other base metal mining, and primary silver mines are scarce. Last October, a historic short squeeze exposed the tightness of the physical silver market. Inventories at major London-based trading centers remain tight, and due to trade policy uncertainties, silver stored in U.S. warehouses is difficult to flow smoothly into global markets. Fitch Solutions (a unit of BMI) explicitly stated in a report on Monday: “We expect shortages in the silver market to persist throughout 2026, mainly due to higher investment demand.” The report also notes that industrial demand will tighten the physical market to unprecedented levels.

This “investment demand (financial attribute) + industrial demand (commodity attribute)” dual drive, combined with supply constraints, forms a solid foundation for a long-term silver bull market. For investors, silver at current prices may still offer higher elasticity and potential returns compared to gold. Of course, high volatility also entails higher risks, but barring fundamental reversals in macro trends, silver’s upward momentum is expected to continue. Market analysis suggests the next target for silver prices could reach $85 and even $90.

Bitcoin and Gold: Digital and Physical Safe-Haven Alliance?

Amid the rising tide of traditional precious metals, cryptocurrency market observers naturally think of a classic topic: the relationship between Bitcoin and gold. Often called “digital gold” by its supporters, does Bitcoin dance in sync with gold during this wave of safe-haven driven by fiat credit concerns and geopolitical risks? Are they competitors or allies?

Recent market performance shows that the correlation between Bitcoin and gold has indeed strengthened during certain risk event windows. When concerns about the stability of the traditional financial system or sovereign credit arise, some funds flow into both gold and Bitcoin, viewing them as alternatives to the traditional fiat system. Bitcoin’s decentralization, censorship resistance, and fixed supply create a logical resonance with gold in countering “systemic risks.” Especially in the context of the Fed’s independence doubts, this resonance may be amplified.

However, it’s important to recognize that they remain vastly different asset classes. Gold has thousands of years of history and the broadest global acceptance, with relatively low volatility, making it a core holding for central banks and large institutions. Bitcoin, with its short history and high volatility, is mainly driven by retail investors and some hedge funds; institutional adoption is growing but still limited. In times of pure geopolitical crises, gold’s physical attributes and historical role make it the undisputed first safe-haven choice; Bitcoin’s performance may be influenced by internal technological cycles, regulatory news, and mainstream exchange flows.

Long-term, Bitcoin and gold are more likely to coexist as “complementary” rather than “substituting” assets. Together, they form a multi-layered store of value and hedge system spanning from traditional physical assets to digital assets. For mature portfolios, holding both gold (to hedge macro and geopolitical risks) and Bitcoin (to prepare for digital currency future and extreme sovereign credit risks) may be a more comprehensive strategy for an increasingly uncertain world. The current strength of gold at least provides a favorable macro narrative for all “non-sovereign” stores of value.

Market Outlook: Risks and Allocation Strategies in the Bull Market

Precious metals, especially gold and silver, have fully entered a bull market after breaking new highs. However, risks still lurk within this feast. First, the rally is driven by multiple expectations; any disappointment or weakening of these expectations could trigger sharp corrections. For example, if the Fed’s future statements unexpectedly turn hawkish, reducing rate cut expectations; or if Iran’s situation suddenly eases, diminishing geopolitical risk premiums. Second, rapid gains have accumulated a large amount of short-term profit-taking, and any disturbance could trigger technical sell-offs.

For investors, chasing high at current levels requires great caution. A more rational approach may be to adopt a “core + satellite” allocation strategy. Treat gold as a “core” long-term holding to hedge macro uncertainties, and use market dips to gradually build positions; view silver as a “satellite” tactical asset with higher volatility, participating in its high-elasticity rally with small positions and strict stop-loss rules. Additionally, monitor related assets such as mining stocks or ETFs, which tend to have higher leverage in a bull market but also carry individual risks.

Looking ahead, the fate of the precious metals market remains closely tied to three main themes: the monetary policy path of global central banks, the evolution of dollar credibility, and the brewing of geopolitical hotspots. Currently, all three point toward a favorable environment for precious metals. But markets are always changing, and investors need to stay alert, balancing trend-following with risk management. The storm in precious metals that began in the Fed’s conference room and Iranian streets may just be starting, with its profound impact extending through 2026 and beyond.