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Donald Trump is a stubborn President, to say the least. Just when markets were enjoying a few relaxing months of silence regarding Fed independence, the Administration has struck again.

Over the weekend, the Department of Justice opened a formal investigation into Federal Reserve Chair Jerome Powell, regarding statements made during his recent Senate Testimony.

It is painfully easy to read between the lines here. This appears to be a political masquerade—a manufactured pretext to fire Powell before his term officially concludes.

The impatience seems unjustified, given that his tenure ends in May 2026 and markets are already expecting an announcement on his successor by the end of this month.

In a special address delivered yesterday evening, Chair Powell fired back, significantly upping his tone regarding the Federal Reserve's stance against politicized interference.

The Verdict: Market Chaos.

Dollar Index 1H Chart. January 12, 2026 – Source: TradingView

The US Dollar is plummeting to start the week and stocks are in the red. On the other hand, keeping with the dominant trend of the past year, Metals are shining bright.

Acting as the preferred safe haven—displacing even the Yen and the now-compromised US Treasuries—precious metals have shot through the roof in early trading.

This political theater highlights a structural shift: Central Banks and investors are aggressively diversifying away from an overdependence on US assets as their traditionally stable reputation erodes.

Gold has now solidified its place as the largest reserve asset for central banks, with China leading a global diversification charge.

Gold and US Dollar as Central Bank Reserves – Courtesy of Vaulted.com

With Silver breaking $85 and Gold comfortably trading above its previous peak ($4,600+), the message is clear: Metals are not looking to ease their rally anytime soon.

The buying frenzy is broad-based, with Platinum, Palladium, Copper, and Aluminum all chasing new monthly or yearly highs as we speak.

Let's dive right into a two-timeframe intraday analysis for Gold (XAU/USD) and Silver (XAG/USD) to see where these flows could be heading.

Gold (XAU/USD) Daily and 2H Charts

Daily Chart

Gold (XAU/USD) Daily Chart, January 12, 2026 – Source: TradingView

After the past week close above $4,500, technicals went right ahead to magnify the return of even-more bullish fundamentals for the yellow metal.

Since August, the rally hadn't seen many retracements, but after the late-December correction, a strong upward Channel is forming, with the latest bounce being used by bulls to reach the current all-time highs.

Easily blasing beyond the Weekly divergence noted last week.

Currently at $4,630 and running, Gold will face a small technical resistance at $4,666, from a key Fibonacci projection (1.618 from 2023 Lows to mid-2025 levels).

If bulls breach the level, there won't be much until $5,000 which coincides with the top of the Channel.

Let's take a closer look.

2H Chart and Technical Levels

Gold (XAU/USD) 2H Chart, January 12, 2026 – Source: TradingView

Forming a tight bull channel on the intraday timeframe, nothing but some overbought conditions seem to be stopping the rally in Gold.

Reaching session highs at $4,630, the frantic buying is stalling a bit.

For pullbacks, aggressive pullback buying could take place at $4,590 (intraday channel lows).

Breaking the steep session channel would point to a retest of the previous All-Time highs around $4,550.

Levels to watch for Gold (XAU/USD) trading:

Resistance Levels

• $4,630 Current session and all-time High
• $4,660 to $4,670 Potential Resistance
• Potential Mini-Resistance 2 $4,700 to $4,720
• Top of Daily Channel and Psychological Level $5,000

Support Levels

• Intraday Channel lows $4,590
• Previous ATH Pivot (as Support) $4,500 to $4,550
• Session Lows Previous ATH Pivot (as Support) $4,500 to $4,550
• Major Intraday Support $4,400 and 4H 50-MA
• December 31 Mini-Support Support $4,280
• Weekly Major Pivot $3,950 to $4,000

Silver (XAG/USD) Daily and 2H Charts

Daily Chart

Silver (XAG/USD) Weekly Chart, January 12, 2026 – Source: TradingView

The action in XAG/USD is starting now looking insane.

Silver is leading its peers yet again in today's action, up around 8% in a huge bullish candle in today's action, easily breaching beyond the $85 psychological level, leaving more technical upside to the rally.

Also forming a Daily Channel, no resistance is emerging before the $88 to $89 Fibonacci Area.

Except for any major fundamental change (like world peace or a return of Fed Hikes), nothing is looking to stop the run.

Let's see what intraday charts are telling us.

2H Chart and Technical Levels

Silver (XAG/USD) 2H Chart, January 12, 2026 – Source: TradingView

With the action now stalling a bit after the tumultuous overnight/morning action, Silver traders will be looking at two technical elements:

• Whether bulls manage to fully break above the Sideways Channel (testing a breakout)
  Or follow the steep Tight Bull Channel from the current session, pointing to even more aggressive action.
  • Breaking below this one hints at a retest of the $80.00 Momentum Pivot.
  • Maintaining the momentum would easily guide the action to $88 and potentially more.

To put things into perspective, SIlver is up 77% since Williams comments hinted at a December Fed Cut!

Levels to watch for Silver (XAG/USD) trading:

Resistance Levels:

• $86.23 Session and All-Time Highs
• Potential Mini-Resistance 1 $87 to $89
• Potential Mini-Resistance and Psychological Level 2 $90 to $92

Support Levels:

• $82 to $84 Previous ATH Pivot (As support)
• $80.00 Momentum Pivot
• $75 to $77 Minor Support and Channel lows
• December 31 Lows $70.00
• Pre-FOMC Major Support $58.00 to $60 and 50-Day MA

Safe Trades and a Successful Week!

Summary

News broke on Sunday night that the Federal Reserve received grand jury subpoenas from the Department of Justice on Friday, escalating the Trump administration's pressure on the nation's central bank. While we do not believe this will alter the near-term course of monetary policy, it will make the next Fed Chair's job that much harder to build a consensus among the 19 members of the Federal Open Market Committee.

• The latest in a string of efforts to pressure the Fed: We believe it is worth highlighting that President Trump's initial reaction was to claim he was unaware of the DOJ's action. That said, the DOJ's investigation follows a year in which the president has made it clear he is unhappy with the Federal Reserve's monetary policy stance, which could have spurred administration officials to open up the investigation without an explicit green-light from President Trump.
• The timing strikes us as odd: Jerome Powell's term as Fed Chair expires in May, leaving only three more FOMC meetings for him to preside over. However, Powell’s term as governor runs until January 2028, and there has been speculation about him staying on as a governor until then to help maintain Fed independence. We suspect the investigation may be an effort by the administration to put pressure on Powell to leave the Board of Governors entirely by May. An open investigation may increase the prospect of him staying to add his weight to preserving central bank independence, but we still see it as more likely than not that he departs after his 14 years of service.
• No influence over the near-term outlook for Fed policy: We do not believe this materially changes the outlook for monetary policy in the short-term. Chair Powell has shown time and again that he believes the best antidote to political pressures on the Fed is to follow the data and set policy based on the Committee’s assessment of the economic outlook, and we expect him to maintain that position. It is also important to remember that setting the federal funds rate is a Committee decision, with 11 other FOMC voters and 18 other FOMC participants involved in the process. Their own hawkish/dovish convictions will continue to be the primary determinant of monetary policy, in our view.
• The investigation could delay the confirmation of the next Fed Chair: Senator Thom Tillis (R-NC) stated last night that he would not support any nominee for Fed Chair until this legal issue is resolved. Given that he serves on the key Senate Banking Committee and has already announced plans to retire at the end of this year, this gives Tillis considerable leverage over the situation.
• More uncertainty for medium-term policy: The DOJ investigation reinforces the narrative that Trump will wield more influence over the next Fed Chair. This is likely to put the next Fed Chair in an even more difficult position of winning over an already divided Committee when it comes to the medium-term monetary policy outlook.
• Political pressure on the Fed, real or imagined, is not costless: Markets mostly took the news in stride, but the modest financial market moves thus far have been consistent with what we would expect to see when worries flare up about Fed independence: higher Treasury yields, a steeper yield curve, a weaker dollar and a rally in gold prices. We expect the FOMC will continue to make policy decisions on the basis of the economic environment—not the political environment—as was clearly laid out by Powell in a video statement yesterday. Nevertheless, this latest episode risks damaging the credibility of Fed independence and U.S. good governance practices.

Silver hit new all-time high following over 6% advance on Monday, as fresh shockwaves from a criminal probe by Trump administration on Fed Chair Jerome Powell struck markets at the start of the week and prompted investors into safety.

Unrests in Iran, with threats of uncontrollable escalation, add to growing uncertainty and boost safe-haven demand, with silver being additionally supported by supply shortages, due to strong industrial demand.

Completion of corrective phase from previous record high and bullish failure swing pattern on daily chart, generate fresh signal of continuation of larger uptrend that was paused for $85.42/$70.03 correction.

Close above former top is needed to confirm fresh positive signal, with violation of initial target at $86.06 (Fibo 100% expansion of acceleration from $70.03) needed to validate wave principles and open way for extension of the third wave of five-wave sequence (from $70.03) towards $90.00 (round-figure and 90.74 (FE 138.2%).

Dips on price adjustments should be shallow and hold above $80 to keep broader bulls in play.

Res: 86.06; 88.00; 89.05; 90.00
Sup: 84.60; 83.54; 82.73; 80.00

Markets

It’s been a while since we’ve seen financial media using “Sell America”. The term was coined in the aftermath of president Trump’s tariff announcement on April 2 to describe surging risk premia rolling over all US assets, from stocks over the currency to government bonds. Trump’s aggressive trade policy came after a series of other - let’s call them unconventional - policy decisions and tested holders’ of US assets nerves. Moves today are of a totally different magnitude but nevertheless equally broad. They originated from what is seen as a renewed attack by the Trump administration on Fed independence. The DoJ served the Fed and its chair with subpoenas related to above-budget Fed HQ renovations. According to the chair himself, though, it’s nothing but a pretext used by the US administration to arm wrestle the Fed into lower (short-term) policy rates. US Treasuries underperform Bunds, with downward pressure strongest at the long end of the curve. Net daily changes vary between +0.2 (2-yr) and +3 bps (30-yr). Bringing Fed independence back on investors’ radar today is a bit unfortunate with a combined $58 3-yr and $39 bn 10-yr auction scheduled for today. Luckily for Treasury, however, market appetite is usually the strongest at the start of the year. The German curve bull flattens by -1 bps (2-yr) to -2.3 bps (30-yr). Intra EMU-spreads are broadly stable, including in France, where two no-confidence votes were filed by the far-left and right over the country’s failure to block the Mercosur trade deal. The Socialists have already signaled they won’t support any of them, meaning the motions are dead on arrival. US stocks open with losses of up to 0.7% but were off the intraday lows (in the futures market). The US dollar lags major peers in the FX market. DXY retraced part of last week’s gains by dropping back below 99. EUR/USD snaps a losing streak by rebounding back towards but remaining below 1.17. You won’t be surprised to read that from a technical point of view, literally nothing changed. The Japanese yen is the only currency worse off than the USD in the G10 environment. Rumours of snap elections, to be announced as soon as Jan 30, are weighing on the currency through rising fiscal risk premia in a not unlikely scenario where PM Takaichi’s ruling LDP regains its majority in the powerful lower house. The impact on JGB’s is yet to be seen since Japanese markets were closed today. Oil prices rose in early morning deals on geopolitical concerns related to protests in Iran and potential US involvement that could upend Iranian oil supply. Brent’s move didn’t go any further than $64 though before hitting a speed bump.

News & Views

The KPMG and REC UK report on jobs as compiled by S&P global, indicates that uncertainty around the economic outlook and rising costs still weighed on recruitment activity at the end of 2025. Permanent staff appointments fall at the quickest pace in four months and with the downturn already in place for 39 months. Temporary billings also decline at a faster pace. Vacancy data signaled another marked reduction in demand for workers at the end of the fourth quarter, with the rate of decline quickening slightly from November. Fewer job opportunities and widespread reports of redundancies drove a further substantial rise in candidate availability. The report at the same time showed a tentative improvement in pay trends. After a multi-year low in September, starting salary touched a seven-month high, but stays below the long term trend. Temporary wages rose but also remain well below the historical average.

Industrial production in Hungary disappointed in November. After two months of positive growth, production declined 2% M/M pushing the level of output 5.4% lower Y/Y. Cumulative production over the first 11 months of 2025 was 5.3% lower compared to 2024. Hungary’s statistical office indicated that ‘production volume decreased in the great majority of the manufacturing subsections’ compared to the same month of the previous year’. Growth in computer, electronic and optical products, as well as the manufacture of food products, beverages and tobacco products was positive, but a decline occurred in the manufacture of transport equipment, as well as in the manufacture of electrical equipment. Last Friday’s November retail sales (2.5% Y/Y) also were unconvincing. These sub-par data come as the MNB last month mitigated its assessment that policy should remain restrictive as it will reassess its policy on a meeting-by-meeting basis. The Hungarian 2-y yield declines another 3 bps today to 5.86%.This compares to levels near 6.30% just one month ago. The forint weakens further to EUR/HUF 386.8.

Daily Pivots: (S1) 0.7990; (P) 0.8004; (R1) 0.8026; More….

Intraday bias in USD/CHF stays neutral for the moment. Overall outlook is unchanged that corrective pattern from 0.7828 low is extending. On the upside, above 0.8016 will target 0.8123 resistance next. Nevertheless, break of 0.7905 support will resume the fall from 0.8123 to retest 0.7828 low. Firm break there will resume larger down trend.

In the bigger picture, price actions from 0.7828 are seen as a correction. Larger down trend from 1.0342 (2017 high) is in still in progress. Break of 0.7828 will target 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Daily Pivots: (S1) 156.54; (P) 156.80; (R1) 157.15; More...

Outlook in USD/JPY is unchanged and intraday bias stays on the upside. Current rise from 139.87 should target 161.8% projection of 142.66 to 150.90 from 145.47 at 158.80. Firm break there will pave the way to 200% projection at 161.95, which is close to 161.94 high. For now, outlook will stay bullish as long as 156.10 support holds, in case of retreat.

In the bigger picture, corrective pattern from 161.94 (2024 high) could have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 154.38 support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Daily Pivots: (S1) 1.1615; (P) 1.1639; (R1) 1.1661; More….

Intraday bias in EUR/USD stays neutral at this point. On the upside break of 1.1742 resistance will argue that pullback from 1.1807 has completed. Rise from 1.1467 should then be ready to resume. Further break of 1.1807 will pave the way to retest 1.1817 high. Nevertheless, on the downside, below 1.1617 will target 1.1467 support. Overall, price actions from 1.1917 are seen as a corrective pattern that might extend further.

In the bigger picture, as long as 55 W EMA (now at 1.1416) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

With the economic calendar nearly empty, markets are fixated on the escalating political risk surrounding Fed Chair Jerome Powell, who is now under federal criminal investigation linked to the renovation of the Fed’s headquarters and his congressional testimony on the matter. The move has taken markets by surprise, particularly given that Powell’s term as Fed Chair is due to conclude in May. A new chair is expected to be appointed soon, with President Donald Trump widely anticipated to announce his pick later this month.

One theory in markets is that the investigation is tied to the broader political calendar, with US midterm elections in November. The administration is seen as keen to push interest rates lower as quickly as possible, and pressure on the Fed has intensified as policymakers resist aggressive easing.

Powell’s response has been unusually direct. In a blunt statement, he warned that “the threat of criminal charges is a 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.

A key question now is whether this episode prompts investors to diversify away from US assets, particularly at the long end of the Treasury curve. While reactions have so far been measured, the potential for a deeper reassessment of US institutional credibility is resurfacing. That risk is starting to show in rates markets. US 10-year Treasury yields have breached the important 4.20% technical resistance zone. A sustained move above that level could open the door to a more meaningful selloff in Treasuries, especially if confidence erosion accelerates.

Under normal circumstances, rising long-end yields would be supportive for Dollar. This time, however, the currency has failed to benefit, as concerns around policy credibility and institutional independence offset the usual rate-supportive dynamics.

Gold has been the clear beneficiary of this environment, surging to fresh record highs as investors seek insulation from political and institutional uncertainty. Attention is also turning to whether Euro could attract renewed inflows as the only viable liquid alternative to Dollar should confidence in US assets deteriorate further.

In FX markets so far, Dollar sits at the bottom of the performance table, followed by Yen and Loonie. Yen remains pressured as markets bet Japan could call a snap election to capitalize on Prime Minister Sanae Takaichi’s strong popularity and pursue fiscal expansion, and thus lifts domestic risk appetite. Kiwi leads gains, followed by Swiss Franc and Sterling, with Euro and Aussie trading in the middle of the pack.

In Europe, at the time of writing, FTSE is up 0.16%. DAX is up 0.50%. CAC is up 0.02%. UK 10-year yield is up 0.02 at 4.398. Germany 10-year yield is down -0.017 at 2.851. Earlier in Asia, Japan was on holiday. Hong Kong HSI rose 1.44%. China Shanghai SSE rose 1.09%. Singapore Strait Times rose 0.47%.

Eurozone Sentix jumps to six-month high, recovery optimism builds

Eurozone investor confidence improved at the start of the year, with Sentix Investor Confidence Index rising from -6.2 to -1.8 in January, well above expectations of -5.1 and the strongest reading since July. The rebound was broad-based, with the Current Situation Index climbing from -16.5 to -13.0 and the Expectations Index jumping from 4.8 to 10.0, both also six-month highs.

Sentix noted that the improvement reflects a narrowing gap between professional and private investors. While institutional investors had already turned more optimistic in recent months, private investors had remained sceptical. That dynamic is now shifting, with private investors beginning to join the recovery narrative, even though differences in outlook between the two groups remain historically large.

Inflation concerns are also easing at the margin. Sentix’s Inflation Barometer shows expectations for slightly softer price pressures, helping to reduce stress on bond markets. However, Sentix cautioned against assuming renewed central bank support, warning that as the recovery takes hold, ECB policymakers are "unlikely to feel much incentive to act".

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1615; (P) 1.1639; (R1) 1.1661; More….

Intraday bias in EUR/USD stays neutral at this point. On the upside break of 1.1742 resistance will argue that pullback from 1.1807 has completed. Rise from 1.1467 should then be ready to resume. Further break of 1.1807 will pave the way to retest 1.1817 high. Nevertheless, on the downside, below 1.1617 will target 1.1467 support. Overall, price actions from 1.1917 are seen as a corrective pattern that might extend further.

In the bigger picture, as long as 55 W EMA (now at 1.1416) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

• The dollar suffered due to threats to the Fed’s independence.
• Gold managed to renew its record highs.

While labour market statistics strengthened the US dollar, the Justice Department’s lawsuit against Jerome Powell seriously weakened it. The USD index recorded its worst fall in three weeks due to fears that the White House could undermine the Fed’s independence, filling the FOMC with very dovish members. This risk stands in striking contrast with the current expectations of just two cuts by the end of 2026.

The US administration’s lawsuit against Lisa Cook is not without logic. She will remain a member of the FOMC for a long time to come. By comparison, the developments involving the Fed Chair appear considerably more perplexing. Jerome Powell is due to leave his post in May. Moreover, thanks to him, the Committee has been leaning towards lowering rates at recent meetings. The case concerning the renovation of the Federal Reserve building may set a precedent for investigating the circumstances surrounding the recent demolition of the East Wing of the White House.

Markets perceive the resumption of pressure on the Fed as a reason to close short positions on EURUSD. December employment growth in line with forecasts and a drop in unemployment to 4.4% gave derivatives reason to reduce the chances of easing in March to 29% and in April to 42%, with a full cut not priced in until June. The five-month pause, coupled with wide spreads on US and other bonds, had created a solid foundation for the US dollar to strengthen over the previous two weeks.

The Supreme Court is ready to come to the greenback’s aid. It has stated that it will rule on the legality of the White House tariffs on 14 January. The US economy could receive additional stimulus in the form of a return to tariffs. Its acceleration could force the Fed to keep rates high for a long time. This will support the bears on EURUSD.

However, the risks of tariffs being declared illegal do not scare the White House. According to Kevin Hassett, the US will be able to quickly bring its tariff policy back to its previous format. Washington has a plan B that is just as effective as plan A.

The revival of the topic of the Fed’s loss of independence allowed Gold to update its record high. For the first time in history, the precious metal exceeded $4,600 per ounce. According to JP Morgan, gold is an anti-fiat currency. The growth of public debt and attacks on central banks are increasing interest in debasement trading. The company is ready to hold up to 20% of its portfolio assets in precious metals and similar assets, changing the classic 60/40 model.