Trump's pressure on the Fed has collapsed the dollar. Gold and silver have record highs

On January 12, the dollar exchange rate collapsed at the fastest pace in almost three weeks, and gold prices reached a new record high on the news that the U.S. Department of Justice threatened the chairman of the Federal Reserve System (Fed) Jerome Powell with criminal prosecution. The transition of the White House's conflict with the head of the Fed to criminal proceedings has revived fears of political interference in the regulator's actions, Bloomberg reports.

The Bloomberg Dollar Spot Index fell 0.2% in Asian trading on Monday, January 12. The drop was the strongest since Dec. 23, 2025. The dollar collapsed after Powell said the regulator received subpoenas from the Justice Department last week threatening criminal charges related to his remarks about spending on the renovation of the Fed's Washington headquarters.

On the same news, as well as due to increased geopolitical uncertainty, the price of gold on January 12 exceeded the $4600 per ounce mark for the first time in history, and silver reached a record high of $84.58 per ounce.

" On Friday, the Justice Department served the Federal Reserve with grand jury subpoenas (the panel that decides whether there is enough evidence to bring criminal charges - Oninvest) threatening criminal prosecution in connection with my testimony before the Senate Banking Committee last June," Reuters quoted Powell as saying. According to him, the threat of criminal charges against him is actually due to the fact that the regulator sets interest rates based on its own assessment rather than following the preferences of US President Donald Trump.

Trump himself told NBC News that he knew nothing about the DOJ's actions. "I don't know anything about it, but he (Powell - Oninvest) is certainly not very good at the Fed, and he's not very good at building buildings," Trump said. A Justice Department spokesman declined to comment on the case, but recalled that the head of the department - the U.S. attorney general - instructed subordinates to "prioritize investigations into any misuse of taxpayer money."

"Macro traders are ready to build up short dollar positions amid the risk that Powell will be limited in his role as Fed chief," Bloomberg strategist Mark Cranfield said. Powell was appointed by Trump to head the Fed in 2018 and his term expires in May 2026. Trump has repeatedly criticized Powell on social media, calling for lower rates and at one point threatening to fire him, though he later backtracked and denied ever considering such a possibility, Bloomberg recalls.

"Trump seems determined to take control of the Federal Reserve (...). Trump's impatience and determination to get borrowing costs lowered suggests his nominee to be the next [Fed] chairman could be dovish and loyalist, and that could pose a risk to the dollar," Bloomberg quoted Fiona Lim, a currency strategist at Malayan Banking Berhad in Singapore, as saying.

Pressure on the U.S. currency on January 12 was also exerted by market expectations of further Fed rate cuts this year after Friday's U.S. jobs report showed that December's job growth was below forecasts, Trading Economics wrote.

Looking for further guidance, investors are now awaiting the publication of fresh US inflation data and reports from major Wall Street banks this week. In addition, markets are assessing geopolitical risks amid intensifying protests in Iran and growing uncertainty in South America, according to the analytical service.

This article was AI-translated and verified by a human editor