Gold Hits Record $4,600 Amid Powell Probe and Global Tensions Spark Safe-Haven Demand

• Federal prosecutors are investigating a probe of the Fed's headquarters and Powell's Congressional testimony, potentially leading to earlier leadership change favoring aggressive rate cuts, which supports gold prices by reducing opportunity cost of holding non-yielding assets
• Geopolitical flashpoints including U.S. military action in Venezuela resulting in President Maduro's capture and renewed tensions with Iran over nuclear facilities are amplifying safe-haven demand
• HSBC projects gold could reach $5,000 per ounce by mid-2026, supported by a weaker U.S. dollar, mounting fiscal deficits, and continued central bank diversification away from dollar reserves despite elevated volatility

Summary

Gold Reaches Record High Above $4,600

Spot gold surged 2% to surpass $4,600 per ounce on Monday, marking a fresh all-time high and extending 2026 gains to approximately 6%. The rally follows a remarkable 65% annual increase in 2025, the strongest performance in decades.

Key Drivers:

The unprecedented rally stems from multiple catalysts. Federal prosecutors are investigating Fed Chair Jerome Powell regarding a security breach at the Fed's Washington headquarters and his Congressional testimony, linked to President Trump's frustration over the central bank's reluctance to cut rates aggressively. Market speculation that Powell could step down early and be replaced by a more dovish candidate has fueled expectations of faster rate cuts, which traditionally benefit gold by reducing opportunity cost.

Geopolitical tensions have intensified safe-haven demand. The U.S. signaled potential military action in Iran, while a military operation in Venezuela resulted in President Nicolas Maduro's capture. These flashpoints underscore persistent global uncertainty.

Market Outlook:

HSBC projects gold could reach $5,000 per ounce by mid-2026, driven by safe-haven flows, a weakening U.S. dollar, and policy uncertainty. The bank's FX strategists anticipate continued dollar weakness through 2026.

Structural support remains strong as mounting U.S. fiscal deficits encourage gold demand. Central banks are expected to continue diversifying from dollar holdings, though purchases may decline from 2022-2024 peaks due to elevated prices.

Recent U.S. economic data showing labor market cooling has amplified rate-cut expectations, further boosting gold's appeal. Analysts from Standard Chartered and Bank of Singapore highlight gold as a high-conviction asset class amid heightened geopolitical and policy uncertainty.