U.S. Dollar Slips as Powell Investigation Shakes Markets, Gold Hits Record High

The U.S. dollar weakened on Monday after retreating from its strongest level in a month, following reports that U.S. prosecutors have opened a criminal investigation into Federal Reserve Chair Jerome Powell. The development has heightened political and market tensions, particularly amid an already strained relationship between the Federal Reserve and the Trump administration, and has triggered renewed volatility across global financial markets.

The U.S. dollar index, which tracks the greenback against six major currencies, fell around 0.3% to 98.899, snapping a five-day winning streak. In contrast, gold prices surged sharply, hitting a record high of $4,563.61 per ounce. The rally in gold came after media reports of the investigation and a video statement from Powell defending the independence of the central bank, reinforcing gold’s role as a safe-haven asset during periods of uncertainty.

Market analysts noted that the escalating conflict between the Fed and the U.S. administration has weighed heavily on investor confidence in the dollar. While strong U.S. economic data, including a robust jobs report released on Friday, had earlier supported expectations that the Federal Reserve will keep interest rates unchanged at its upcoming meeting, political risks are now offsetting those gains. Ongoing geopolitical tensions, including reports of deadly protests in Iran, have also increased demand for traditional safe havens, though the dollar has yet to benefit meaningfully from this dynamic.

Investors are now turning their attention to a packed economic calendar. The U.S. consumer price index data for December, due Tuesday, is one of the final key indicators before the Federal Reserve’s policy decision later this month. With U.S. inflation still above the Fed’s 2% target and the labor market remaining resilient, most analysts expect interest rates to stay on hold, limiting near-term upside for the dollar.

In currency markets, the euro, British pound, Australian dollar, and New Zealand dollar all posted modest gains against the greenback, while the dollar slipped against the Japanese yen and Chinese yuan. Meanwhile, cryptocurrencies saw mild gains, with Bitcoin trading above $91,500 and ether hovering near $3,127, reflecting cautious risk appetite among investors navigating a complex mix of economic data and political uncertainty.