Gold surges past $4,600 milestone as Powell’s remarks spark safe-haven rush

Gold Hits New All-Time High Above $4,600 Amid Market Turmoil

Gold (XAU/USD) surged to an unprecedented peak above $4,600 on Monday, fueled by a wave of safe-haven demand. This rally followed news that the US Department of Justice has filed charges against Federal Reserve Chair Jerome Powell related to renovations at the Fed’s headquarters. At the latest update, gold was trading at $4,606, marking a gain of over 2% for the day.

Legal Uncertainty and Geopolitical Risks Drive Bullion Higher

The precious metal’s sharp rise was triggered by heightened risk aversion after the New York Times reported that federal prosecutors have launched an investigation into Fed Chair Powell. This legal development, combined with escalating global tensions, has prompted investors to seek refuge in gold.

In response to the charges, Powell released a video statement clarifying that the allegations are unrelated to his previous testimony or the Fed building’s renovations. He asserted that the accusations are politically motivated, describing them as “pretexts” used by the Trump administration.

Powell emphasized that the threat of prosecution stems from the Federal Reserve’s commitment to setting interest rates based on its independent assessment of what best serves the public, rather than aligning with presidential preferences.

Shifting Rate Cut Expectations and Heightened Global Tensions

Ahead of the US market opening, traders scaled back their expectations for Fed rate cuts this year, now anticipating a reduction of just 48 basis points—down from the previous estimate of 55 basis points before Wall Street opened.

Geopolitical uncertainty further intensified the risk-off sentiment. Former President Trump issued a stern warning to Iran, cautioning against crossing certain lines as he considers possible responses to Tehran’s actions. Additionally, his remarks regarding Greenland contributed to the surge in gold prices.

Looking forward, the US economic calendar is set to include key releases such as inflation data, the ADP Employment Change four-week average, housing statistics, and speeches from Federal Reserve officials.

Market Movers: Gold Climbs Alongside US Treasury Yields

• Despite the US 10-year Treasury yield climbing nearly 1.5 basis points to 4.179%, gold prices continued their upward trajectory.
• Recent data from the US Bureau of Labor Statistics showed that December’s Nonfarm Payrolls increased by 50,000—below the forecast of 60,000 and down from the previous month’s 64,000. However, the unemployment rate improved to 4.4%, beating expectations and easing concerns about the labor market.
• Consumer sentiment in January, as measured by the University of Michigan, rose to 54 from December’s 52.9, surpassing projections. Inflation expectations for the coming year remained steady at 4.2%, while five-year expectations edged up to 3.4% from 3.2%.

Technical Outlook: Gold Breaks $4,600 on Strong Momentum

The technical landscape for gold remains bullish, with the ongoing uptrend confirmed by the Relative Strength Index (RSI). While the RSI indicates overbought conditions, it has not yet reached extreme levels, suggesting there may be room for further gains.

Should XAU/USD maintain its position above $4,600, the next resistance lies at the all-time high of $4,630, followed by $4,650. A decisive move above these levels could open the path toward $4,700.

Conversely, if gold closes below $4,600 on a daily basis, sellers may attempt to drive prices down toward the intraday low of $4,450, with the January 12 low of $4,508 and the $4,450 mark serving as key support levels.