The dollar slipped to a 4-year low, while gold and silver surged to further record highs, after Fed Chair Powell downplayed their macro signal.
Federal Reserve Chair Jerome Powell pushed back against political pressure on the US central bank on Wednesday and defended its independence, urging the next chair to “stay out of elected politics”. Markets, however, appeared unconvinced, accelerating a sell-off in the dollar as gold and silver hit fresh record highs.
"Don't get pulled into elected politics. Don't do it," Powell told reporters.
The reaction followed the Federal Reserve's latest decision to leave interest rates unchanged in a range between 3.5% and 3.75%.
Asked whether the Fed was drawing any macroeconomic signal from the explosive rally in precious metals, Powell played down its significance.
“We don't take much message macroeconomically,” Powell said. "The argument that we are losing credibility is simply not the case. If you look at where inflation expectations are, our credibility is right where it needs to be."
He highlighted that the Fed does not “get spun up over particular asset price changes”, although it continues to monitor markets closely.
Markets react
The market reaction sharply contradicted Powell’s message.
Gold jumped to $5,500 per ounce, setting a new all-time high, while silver climbed above $117 per ounce.
Gold is now up over 20% this month, on track for its strongest monthly performance since January 1980.
Silver’s gains have been even more dramatic, with prices already up around 55% this month — the strongest monthly rise on record.
Meanwhile, the US dollar index, which tracks the greenback against a basket of major currencies, fell to levels last seen four years ago.
“The next couple of days will show whether investors have concluded that the dollar needs to go lower and that today’s bounce is a selling opportunity,” said James Knightley, chief economist at ING.
The dollar is now more than 10% below its 2025 highs, weighed down by persistent macro headwinds, including global central bank diversification away from US assets, widening fiscal deficits, recurring questions over Fed independence, and expectations of further policy easing.
'Is gold the new bitcoin?’
Veteran Wall Street economist Ed Yardeni linked the rally to politics, suggesting its sustained popularity could make “gold the new bitcoin”.
Yardeni argued that US President Donald Trump, a vocal supporter of cryptocurrencies, appears to be inadvertently fuelling the rise in gold prices.
On Tuesday, Trump said “the dollar is doing great” when asked whether the currency had fallen too much, signalling he is comfortable with a weaker greenback.
“A weaker dollar may put upward pressure on US inflation, which would also boost the price of gold,” Yardeni said.
Commodities surge beyond gold and silver
The rally has spread across the broader commodities market.
Platinum climbed above $2,900 per ounce for the first time on record this week and is already up 33% this month. Palladium, which benefits from stronger industrial demand, rose to a four-year high and is up more than 22% year to date.
Copper also surged, hitting a record $6.30 per pound on Thursday.
Across commodity markets, investors are increasingly positioning for prolonged dollar weakness, amid perceptions that US institutions are willing to tolerate — or quietly accept — the shift.
Euro stronger, equities mixed
In Europe, the euro traded near $1.1950, edging lower after briefly breaking above $1.20 earlier in the week following Trump’s comments.
The single currency has now risen for three consecutive months against the dollar and is up around 15% year on year.
European equities were mixed. France’s CAC 40 and Italy’s FTSE MIB gained around 0.5%, while Germany’s DAX fell over 1%.
Frankfurt’s losses were led by SAP, which slid 16% — its biggest one-day drop since October 2020 — after weaker-than-expected cloud sales and a cut to 2026 revenue guidance outweighed in-line fourth-quarter results.
