Power price rallies push gold, silver to record highs on safe-haven demand

(Kitco News, Min. Jan. 12th, 2025) – Gold and silver prices are strongly up and both hit new record highs in early U.S. trading Monday. Risk aversion is significantly elevated in the marketplace to start the trading week, amid tumult in the Federal Reserve and civil unrest in Iran that are driving safe-haven demand to the precious metals markets. February gold was last up $98.30 at $4,599.30. March silver prices were up $4.849 at $84.205.

Keen risk aversion in markets as Federal Reserve served grand jury subpoenas. Federal Reserve Chair Jerome Powell said Sunday the U.S. Department of Justice has served the Federal Reserve with subpoenas and threatened it with a criminal indictment over Powell’s testimony last summer about the Fed’s building renovations. “The move represents an unprecedented escalation in President Donald Trump’s battle with the Fed, an independent agency he has repeatedly attacked for not cutting its key interest rate as sharply as he prefers,” said the Associated Press. The subpoenas relate to Powell’s testimony before the U.S. Senate Banking Committee in June, Powell, regarding the Fed’s $2.5 billion renovation of two office buildings, a project that Trump has criticized as excessive. “Powell on Sunday cast off what has up to this point been a restrained approach to Trump’s criticisms and personal insults, which he has mostly ignored. Instead, Powell issued a video statement in which he bluntly characterized the threat of criminal charges as simple ‘pretexts’ to undermine the Fed’s independence when it comes to setting interest rates,” said the AP report. In a brief interview with NBC News Sunday, Trump insisted he didn’t know about the investigation into Powell. When asked if the investigation is intended to pressure Powell on rates, Trump said, “No. I wouldn’t even think of doing it that way,” the AP report said. Stock and financial markets were roiled overnight on the surprise Powell/Fed news. European stocks sold off overnight. The U.S. stock indexes are set to open sharply lower and the U.S. dollar index under pressure. Gold prices shot up over $100 an ounce and hit a record high overnight, with silver up nearly $5 an ounce and also hitting a new high.

Iran’s civilian protests growing, hundreds killed. Iran’s foreign minister said security forces have “full control” of the country after two weeks of ongoing upheaval, accusing Israel and the U.S. of fomenting the nationwide protests in which hundreds of people have been killed. Abbas Araghchi repeated claims by the Iranian government that “rioters and terrorists” had killed police and civilians and destroyed public property using “Daesh-style violence,” referring to the Arabic acronym for Islamic State, Bloomberg reported. The demonstrations continued into Monday. “We have many pieces of evidence which show interference by the U.S. and Israel in this terrorist war,” Araghchi said in an interview to state TV, adding “Israel is directly responsible, and also Americans through their remarks by promoting violence.” Protests in Iran erupted on Dec. 28 after a sudden collapse in the value of the Iranian currency. They broadened into the biggest and most violent challenge to the rule of Ayatollah Ali Khamenei and the Islamic Republic since it was established after the 1979 revolution that ousted a pro-U.S. monarch. More than 540 have been killed in the protests and over 10,000 arrested, according to the Human Rights Activist News Agency, which is tracking demonstrations in 186 cities across Iran’s 31 provinces. Communications remain largely cut off, which has made it difficult to track the full scope of the movement, Bloomberg reported. President Donald Trump said Sunday that Washington is mulling potential options in response to reports of deadly crackdowns in Iran, but added that Tehran’s leadership has reached out to seek talks. “We’re looking at it very seriously. The military is looking at it, and we’re looking at some very strong options,” Trump told reporters on Air Force One as he returned to Washington from his Mar-a-Lago home in Florida. “We’ll make a determination,” said Trump and as reported by Bloomberg.

U.S. may lift sanctions against Venezuela as early as this week. U.S. Treasury Secretary Scott Bessent told Reuters that additional U.S. sanctions on Venezuela could be lifted as soon as this week to facilitate crude oil sales, and that he will also meet this week with the heads of the International Monetary Fund and World Bank on their re-engagement with Venezuela. Bessent said in an interview late on Friday that almost $5 billion worth of Venezuela’s currently frozen IMF special drawing rights monetary assets could be deployed to help rebuild the country’s economy. “We’re de-sanctioning the oil that’s going to be sold,” Bessent said during a visit to a Winnebago Industries engineering facility, Reuters said. The U.S. Treasury is examining changes that would facilitate the repatriation of sale proceeds of the oil stored largely on ships back to Venezuela. “How can we help that get back into Venezuela, to run the government, run the security services and get it to the Venezuelan people?” he said of the Treasury’s sanctions analysis. Asked when more sanctions could be removed from Venezuela, Bessent said, “It could be as soon as next week,” but did not identify which ones. The moves are part of the Trump administration’s effort to stabilize Venezuela and encourage the return of U.S. oil producers to the country a week after U.S. forces captured Venezuelan leader Nicolas Maduro in Caracas and brought him to New York to face drug trafficking charges.

The key outside markets today see the U.S. dollar index lower. Crude oil prices are lower and trading around $58.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently 4.19%.

Note: The gold market operates through two primary pricing mechanisms. The first is the spot market, which quotes prices for on-the-spot purchase and immediate delivery. The second is the futures market, which sets prices for delivery at a future date. Due to year-end positioning market liquidity, the December gold futures contract is currently the most actively traded on the CME.

Technically, February gold futures bulls’ next upside price objective is to produce a close above solid resistance at $4,750.00. Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $4,400.00. First resistance is seen at the record high of $4,612.70 and then at $4,650.00. First support is seen at today’s low of $4,520.80 and then at $4,500.00.

March silver futures bulls have regained power and their next upside price objective is closing prices above solid technical resistance at $87.50. The next downside price objective for the bears is closing prices below solid support at $75.00. First resistance is seen at the record high of $84.69 and then at $85.00. Next support is seen at $82.50 and then at $80.00.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com