Expert Warns of Financial Risks as Confidence in Banks Wanes Amid Gold Price Surge

Federal Reserve Chair Jerome Powell is under criminal investigation by the U.S. Department of Justice, with prosecutors examining remarks he made to Congress regarding a $2.5 billion renovation project at the Fed’s headquarters. Powell has called the probe a political attempt to pressure the central bank into lowering interest rates. The investigation has raised questions about the independence of the U.S. central bank.

Gold prices reached a record high above $4,600 per ounce as investors sought safe-haven assets. The investigation into Powell and broader economic uncertainty have driven demand for precious metals, with gold and silver prices experiencing sharp gains. Analysts see the move as a reflection of inflationary concerns and a lack of trust in traditional financial institutions.

Allied Gold Corp (AAUC) reported improved operational performance, with Q3 production reaching 87,000 ounces and adjusted earnings at $0.29 per share. The company maintains a strong cash balance and expects a 40% production increase in Q4. Despite challenges in Mali, where the company operates, operations have remained unaffected by geopolitical tensions.

Why Did This Happen?

The U.S. Department of Justice’s investigation into Powell centers on whether he misrepresented details of the Fed’s headquarters renovation to Congress. Powell has denied any wrongdoing and emphasized that the investigation appears to be a political move by the Trump administration. The probe has sparked debates about the role of the central bank and the potential for political interference in monetary policy.

The broader economic context includes rising inflation expectations and concerns about the stability of the U.S. dollar. The 10-year Treasury inflation-protected securities inflation break-even rate has approached 2.3%, signaling mild concerns among investors about long-term inflation.

How Did Markets React?

Financial markets reacted to the news with increased volatility. The S&P 500 opened lower, with futures indicating a potential decline of 0.6% as traders digested the uncertainty. The U.S. dollar weakened against a basket of currencies, and the yield on Treasury bonds rose slightly. Precious metals, particularly gold and silver, experienced strong demand, with gold reaching record levels.

Investors also shifted focus to alternative assets. DexCom, a medical device company, saw its stock rise after reporting strong preliminary results for Q4. The company’s revenue exceeded expectations, and it reaffirmed its 2026 guidance. However, the broader market was more influenced by the Powell investigation and the ongoing political tensions.

What Are Analysts Watching Next?

Analysts are closely monitoring the 10-year Treasury inflation break-even rate and its implications for inflation expectations. If the rate crosses 2.5%, it could signal a shift in market sentiment and trigger further volatility. The Federal Reserve’s independence remains a key concern, particularly as Powell’s term as chair is set to expire in May. Any changes to the central bank's leadership could influence interest rate decisions and market behavior.

Investor confidence in traditional financial institutions is also under scrutiny. The rise in demand for gold and the arrest of a suspect in Canada’s largest-ever gold heist highlight broader concerns about financial security. Analysts note that the case dubbed Project 24K and the broader political climate could influence how investors allocate capital in 2026.

Allied Gold Corp’s performance and its long-term growth strategy are also drawing attention. The company’s Sadiola Phase 1 expansion is nearing completion, and its tier-one Kermuk asset is being developed. Despite geopolitical challenges, the company remains focused on operational improvements and long-term production goals. Its stock rose 2.95% following the earnings announcement, reflecting investor confidence in its strategy.