Geopolitical Risks and Federal Reserve Independence Concerns Drive Demand for Metals
The geopolitical uncertainties surrounding the Trump administration and potential threats to the independence of the Federal Reserve (Fed) are driving up the demand for metals.
Record-Breaking Year for Mining
The mining industry closed 2025 on a high note, with exports surpassing $6 billion, marking a historic record.
Metal Rally: Silver Outperforms Nvidia
In a surprising turn of events, silver has outperformed Nvidia, becoming the second most valuable asset in the stock market.
Uncertain US Political Climate Fuels Demand for Metals
The frequent policy shifts of the Trump administration have created an uncertain environment in the United States, causing investors to shy away from the dollar and Treasury bonds.
Gold and Silver Reach Historic Highs
Gold and silver reached historic highs on Friday as investors sought safe havens amidst the uncertainty of US politics and potential threats to the independence of the Federal Reserve. Gold rose by 1.5%, reaching $4,985 per ounce, after hitting a record high of $4,989.54. Silver, driven by industrial demand, rose by 5% to $101.17, surpassing the $100 mark for the first time.
“Geopolitical risks and the unconventional US presidency keep the demand for gold high,” says Kathleen Brooks, an analyst at XTB.
Trump’s Policies Boost Precious Metals
Precious metals were initially boosted this week by Donald Trump’s attempts to take over Greenland and his threats to impose additional tariffs on opposing countries. Despite retracting his statements at the World Economic Forum in Davos, where he renounced the use of military force or tariff coercion, gold continued its upward trend.
The frequent policy shifts of the Trump administration have created an uncertain environment in the United States, causing investors to move away from the dollar and Treasury bonds. “Fears of a Fed under influence contribute to the rise of precious metals” and negatively affect the dollar, adds Stephen Innes of SPI AM.
Federal Reserve Under Investigation
The US Department of Justice is conducting an investigation into the Fed Chairman, Jerome Powell, based on hearings related to renovation works at the Fed’s headquarters. Powell believes this is a “pretext” to sideline him.
Market Seeks Protection from Inflation and State Debt
Lastly, the market is also seeking to protect itself from inflation and the widespread debt of states.
Conclusion
The geopolitical uncertainties surrounding the Trump administration and potential threats to the independence of the Federal Reserve are driving up the demand for metals. As investors seek safe havens amidst these uncertainties, gold and silver have reached historic highs. The market is also seeking protection from inflation and state debt, further fueling the demand for precious metals.
