“No one’s above the law”: Jerome Powell’s defiant stand against the Oval Office

Jerome Powell has spent years speaking in the measured, cautious tones of a career diplomat. As the steward of the world’s most powerful central bank, his words are usually designed to calm markets, not ignite them. But on Sunday, 11 January, the mask slipped. In a video statement that sent shockwaves through the financial world, Powell accused the Trump administration of "pretextual" legal warfare.

As per Bloomberg, this isn't just about a $2.5 billion office renovation; it’s about a President demanding loyalty from a man sworn to be independent. Today, the legendary "Fed Put"—the market's long-standing belief that the central bank would always step in to save the day—has been replaced by a "Fed Probe."

The pretext: A $2.5 billion renovation

The spark for this historic conflagration, on the surface, is a dispute over real estate. The Department of Justice (DOJ) served the Federal Reserve with grand jury subpoenas on Friday regarding a decade-long project to modernise its Washington D.C. headquarters.

However, Powell isn’t buying the "oversight" narrative. In a blunt video address, he described the investigation as a "pretext" aimed at forcing his hand on interest rates. According to Reuters, Powell argued that the threat of criminal charges is a direct "consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

Trump’s populist push: lighting the fuse

The timing is no coincidence. In the back half of last week, President Trump dramatically ramped up his populist economic messaging in a bid to juice markets in an election year - moves that, paradoxically, may have helped trigger the sell-off now unfolding.

Among the proposals floated or ordered:

• Directing “his representatives” to buy mortgage-backed securities to push borrowing costs lower
  
  
• Banning institutional investors from buying single-family homes
  
  
• Floating a one-year 10% cap on credit-card interest rates - with no enforcement detail
  
  

For fund managers, this wasn’t stimulus. It was policy improvisation. And when combined with renewed attacks on the Fed, it raised a red flag: political interference in the plumbing of the financial system.

As one strategist put it privately: Trump wants higher stocks now, but attacking Fed independence is one of the fastest ways to scare off the very capital that supports them.

Market mayhem: Gold soars, dollar dips

The financial markets reacted with immediate and visceral alarm. The "institutional risk premium"-the cost investors pay for political instability - is suddenly front and centre.

• Gold’s historic Run: According to The Straits Times, spot gold prices hit an unprecedented record of $4,563.61 per ounce as investors fled for the ultimate safe haven.
• Greenback under fire: The US dollar index fell 0.3% to 98.899, according to Reuters, as confidence in the autonomy of the world’s reserve currency wavered.
• Futures in the red: US stock futures tumbled, with the Nasdaq-100 shedding 0.6% in early trading as the tech sector braced for a more volatile interest rate environment.

Why gold is surging

Gold’s surge isn’t about technicals anymore, according to analysts. It’s about trust.

Even with gold flashing overbought signals, demand continues to build. Why? Because the list of macro risks keeps growing:

• Political interference in monetary policy
  
  
• Rising geopolitical tensions, including reports of potential US action in Iran and escalating Arctic positioning by the UK and Germany
  
  
• Rate-cut uncertainty ahead of key US CPI data
  
  

As analysts note, gold thrives when rules feel flexible and institutions feel vulnerable. And right now, both boxes are ticked.

Silver: same tailwinds, sharper edges

Silver, meanwhile, is riding the same macro wave - but with extra volatility.

Its dual identity matters. Safe-haven flows support silver alongside gold, but industrial demand adds fuel when growth narratives resurface. That combination makes silver powerful - and dangerous.

Analysts warn that silver rallies often attract fast money. When sentiment shifts, exits can be just as violent. For investors, silver remains compelling, but timing matters far more than it does with gold.

The stakes: Autonomy vs. allegiance

This isn't just a legal battle; it’s a constitutional crisis in slow motion. As noted by Maybank strategist Fiona Lim in The Straits Times, the administration’s pressure suggests a desire to install a "loyalist" when Powell’s term expires in May.

"Powell has had enough of the carping from the sidelines and is clearly going on the offensive," Ray Attrill, head of FX strategy at National Australia Bank, told Reuters. By moving the fight into the public eye, Powell is betting that the market’s fear of a politicised Fed will be a stronger shield than any legal defence.

Key takeaway

For investors, the playbook has changed, according to analysts. The Fed is no longer just fighting inflation; it is fighting for its very existence as an independent body. As Saxo Markets analysts pointed out, the "open warfare" between the Fed and the White House has introduced a level of volatility that hasn't been seen in decades. 

Whether this ends in a courtroom or a boardroom, one thing is clear: the era of the "measured" Fed is over, according to analysts. The era of the “defiant” Fed has begun.

Gold technical outlook

Gold is extending its bullish advance, pushing into fresh highs near the upper Bollinger Band and reinforcing the strength of the underlying trend. The rally remains well-supported by momentum indicators, with the Relative strength index rising smoothly toward overbought territory, signalling strong buying pressure rather than an exhausted move. 

While the pace of gains suggests the risk of near-term profit-taking is increasing, the broader structure remains firmly constructive. As long as price holds above the $4,035 support zone - and more importantly above $3,935 - any pullback could be corrective rather than trend-breaking. 

Sustained strength above current levels could keep the upside bias intact, while consolidation would allow momentum to reset without undermining the broader bullish narrative. There is always the risk of price action surprising and doing the unexpected, traders should beware. You can monitor these levels with a Deriv MT5 account.