Markets Today: Safe Havens Benefit on Trump-Fed Feud, Silver Gains 5% as Gold Breaches $4600/oz. What Comes Next?

[Ben Graham]

Asia Market Wrap - Japanese Markets Closed

Most Read: 2026 US Dollar Forecast: How the Fed, Government Spending, and AI Will Drive Volatility

US stock futures dipped on Monday after Federal Reserve Chair Jerome Powell announced that the Trump administration is threatening him with a criminal investigation, sparking fears about the central bank's independence.

S&P 500 futures dropped 0.6% after Powell disclosed that the Justice Department is demanding records regarding renovations to the Fed’s offices. This legal pressure marks a serious escalation in President Trump's ongoing dispute with Powell over interest rates, as the President pushes for deeper cuts and has even discussed firing the Fed Chair.

Conversely, Asian stock markets rose, driven by tech stocks, as investors were reassured by data showing the US labor market is slowing down but not falling apart. Please note that Japanese markets were closed for a holiday.

European Session - European Shares Slip

European shares dropped on Monday as political clashes in the US made market participants nervous.

The STOXX 600 index fell 0.2%, largely because bank stocks tumbled 1.1%. This decline was driven by President Trump's recent proposal to cap credit card interest rates at 10% for one year, which caused shares of Barclays to fall 4.5% and HSBC to dip 1%.

Market anxiety also rose after the Trump administration threatened to indict Federal Reserve Chair Jerome Powell..

In other news, AstraZeneca shares fell slightly after the company was removed from the Nasdaq-100 index, while the French biotech firm Abivax surged nearly 23% after its CEO spoke optimistically about the potential of their new experimental drug.

On the FX front, the US dollar dropped sharply on Monday, ending a five-day winning streak as political turmoil in the US prompted investors to sell American assets.

The currency fell nearly 0.4% against a basket of major rivals.

The Swiss franc was the strongest performer, rising more than 0.5% against the dollar, while the Euro climbed 0.44% to mark its best day in a month.

The dollar also weakened slightly against the Japanese Yen and the Chinese Yuan, with the exchange rate for the Yuan dropping to its lowest level in a week.

Currency Power Balance

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Source: OANDA Labs

Gold prices broke through the $4,600 barrier for the first time on Monday, setting a new record alongside silver as investors rushed to buy safe assets.

This surge is largely driven by the escalating conflict between President Trump and the Federal Reserve, which has made traders nervous about financial stability.

Gold jumped 1.7% to trade around $4,585, after briefly peaking at $4,600.33 earlier in the day.

Silver performed even better, climbing over 5% to roughly $84 per ounce, following its own all-time high of $84.60.

Read More:

CPI is back on time – Markets Weekly Outlook

Gold (XAU/USD) Slips 1.2% Before 50-Day MA Provides Support. Acceptance Above $4500/oz Remains Key

Monetary policy divergence: Australia & Eurozone CPI and the EUR/AUD tumble

Economic Calendar and Final Thoughts

Data is largely thin today with markets likely to focus on developments in the renewed Trump-Fed spat which could dominate and drive market sentiment in the early part of the week.

The risk of the dollar dropping significantly is high if there are more signs that the government is trying to control the Federal Reserve. To understand where things are heading, market participants should watch the bond market closely. If bond traders start betting on more interest rate cuts (short-term) or start worrying about the Fed's independence (long-term), the dollar could fall.

Specifically, if the difference between short-term and long-term bond yields grows sharply (a "steepening curve"), it would likely signal a drop in the dollar's value.

Another event that was expected to help the dollar this week is the Supreme Court's ruling on President Trump's tariffs, which could happen between Tuesday and Thursday. Market participants generally expect the court to rule against the tariffs.

However, right now, the market is too nervous about the fight between the White House and the Fed to buy dollars comfortably. Before market participants feel safe buying again, they need clarity on this political conflict.

If we end up with a mix of high inflation and a politically weakened Fed, it could cause serious concerns about the economy and lead to a major crash in the dollar's value as the week progresses.

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Chart of the Day - FTSE 100

From a technical perspective, the FTSE 100 index has finally breached the psychological 10000 mark.

Price has pulled back since with bouts of volatility and that shouldn't be a surprise. When price breaches such psychological levels we do tend to see some volatile price swings.

The main concerns for bulls at the moment is that the index appears as though we have printed a double-top pattern on the four-hour timeframe as well, a sign that a potential pullback could materialize.

Immediate support which may be tested in the near-term include the 9973 and 9943 handles respectively.

However, a key level on the four-hour chart for bullish continuation will be the psychological 10000 mark. A break of this level could bring a deeper correction into play.

FTSE 100 Index Four-Hour Chart, January 12, 2026

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Source: TradingView.com (click to enlarge)

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