Gold Holds Above $2,300 as Market Reactions Ebb Following Fed Independence Concerns

Gold prices steadied on Monday at $2,315 per ounce, retreating slightly from a recent intraday high of $2,348. The move followed a surge triggered by mounting speculation that executive branch influence could compromise the Federal Reserve’s autonomy. The volatility emerged after a series of public remarks from senior administration officials questioning the Fed’s long-term inflation targets and independence in setting interest rates. The benchmark gold futures contract (GC=F) on the COMEX exchange recorded a 3.2% increase on Friday, marking the largest single-day gain since late 2024. This rally pushed the metal above the psychological $2,300 threshold, with CME Group data showing a 14% spike in short-covering trades over the weekend. Analysts noted that gold’s performance reflected heightened demand for safe-haven assets amid geopolitical tensions and policy uncertainty. The uptick in gold prices coincided with a 1.7% drop in U.S. Treasury yields, particularly the 10-year note, which fell to 4.32%—its lowest level in two weeks. This inverse relationship suggests that investors are shifting capital from fixed-income instruments toward non-yielding assets like gold, signaling a preference for protection against both inflation and policy-driven market disruption. Market participants are now monitoring the upcoming Federal Open Market Committee (FOMC) meeting in mid-February for any signals on the Fed’s stance regarding its independence. Financial institutions including JPMorgan Chase and Goldman Sachs have issued internal reports warning that sustained political pressure could undermine confidence in U.S. monetary policy, potentially triggering broader market repricing across equities, bonds, and currencies.