Gold prices climbed to a seven month peak on Tuesday, reaching 4,635.98 dollars per troy ounce as investors sought safety amid escalating political pressure on the United States (US) Federal Reserve and rising tensions between Washington and Tehran.
The precious metal gained 1.08 percent from Monday’s close, extending a rally that has lifted prices by 7.65 percent over the past month. Compared to January 2025, gold has surged 72.03 percent, according to contract for difference (CFD) trading data.
Demand strengthened after the Justice Department served Federal Reserve Chair Jerome Powell with grand jury subpoenas on Friday. Powell revealed the subpoenas in a video statement Sunday night, saying they threatened criminal indictment over his June congressional testimony about the central bank’s 2.5 billion dollar headquarters renovation. The Fed chair characterized the probe as retaliation for setting interest rates based on economic evidence rather than presidential preferences.
December inflation data suggested moderating price pressures, with figures showing a clearer read after earlier statistics were distorted by temporary shutdown effects. The data bolstered expectations that the Federal Reserve might cut interest rates more aggressively than officials have indicated.
Rate futures markets now reflect investor expectations split between two or three cuts during 2026, exceeding the Federal Reserve Open Market Committee’s median projection of a single reduction. Lower interest rates typically reduce the opportunity cost of holding non yielding assets like gold, making the metal more attractive to investors.
Geopolitical uncertainty added to safe haven demand. President Donald Trump told reporters Sunday he was considering strong military options for Iran, with officials briefing him on potential interventions as protests in that country have led to hundreds of deaths. Iranian Foreign Minister Abbas Araghchi responded by warning his country was prepared for war if Washington chose to test it.
Trump has repeatedly threatened military action over Iran’s response to nationwide protests that began in late December. The demonstrations initially focused on economic grievances but have expanded into broader challenges to the Iranian government.
Some market participants questioned whether gold’s momentum could be sustained. Technical indicators suggest the metal has entered overbought territory, with traders pointing to resistance levels near current prices. However, continued uncertainty about Federal Reserve independence and Middle East stability may keep demand elevated in coming weeks.
The rally has pushed gold well past levels seen during most of 2025, when prices traded in a range between 2,600 and 3,500 dollars per ounce. Analysts note that central bank purchases, particularly from emerging market monetary authorities, have provided consistent support for prices throughout the current cycle.
Treasury Secretary Scott Bessent reportedly expressed concern to Trump about market volatility stemming from the Powell investigation, though US equity indices showed limited immediate reaction. The S&P 500 closed at a record high Monday, rising 0.16 percent despite the weekend’s developments.
Republican senators from both the Banking Committee and broader caucus criticized the Justice Department’s move. Senator Thom Tillis of North Carolina said he would oppose confirmation of any Trump nominee for Federal Reserve positions until the legal matter was resolved.
Gold remains the most widely traded safe haven asset during periods of political and economic turbulence. The metal’s recent performance reflects how monetary policy uncertainty and geopolitical risk can combine to drive investor behavior, even as broader financial markets digest developments with varying degrees of concern.
