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Trump-Powell fight unnerves gold investors, as record is set at $4,600/oz

On Monday, gold prices rose by about 2%, reaching an all-time record of $4,600 per troy ounce. Silver also broke a new record, after the Trump administration launched a criminal investigation into Federal Reserve Chairman Jerome Powell.

Gold spot jumped by 1.9%, to $4,596.05 an ounce, at 0931 GMT. It had earlier reached a session high of $4600.33. U.S. Gold Futures for 'February Delivery' gained 2.3%, reaching $4,606.20.

Zain Vawda is a?analyst with MarketPulse, by OANDA. He said that the Fed's independency has been openly questioned, and the "political risks" discount, which was usually reserved for emerging markets, is now affecting the U.S. Dollar, pushing investors towards hard assets.

Monday, tensions between Trump and the Fed escalated and Wall Street futures fell and the dollar dropped the most in the last three weeks.

The Trump 'administration threatened to indict Powell - over Congressional testimony he provided last summer. Powell called this action a "pretext", for the administration, to gain more control over interest rates. Trump wants to drastically cut them.

Goldman Sachs, Morgan Stanley and other major brokerages expect to see two rate cuts of 25 basis points each in September and June.

Trump also said that he was weighing up a number of options, including military options for a violent crackdown against Iranian protests.

Iran's unrest is occurring as Trump exercises U.S. muscle internationally. He has?ousted Venezuelan President Nicolas Maduro and discussed acquiring Greenland via purchase or force.

Gold and other non-yielding investments tend to perform well in low interest rate environments, as well as during times of geopolitical and economic uncertainty.

Spot silver increased 5.5% to $84.32 an ounce, after reaching a record high of $84.60 at the start of the day.

"The path (for silver), is open towards $90 per ounce and possibly $100 per ounce, if the industrial pressure tightens. Vawda stated that the fact that gold to silver ratio is shrinking usually indicates that silver has more room for growth than gold.

After reaching a record-high of $2,478.50 per ounce on December 29, spot platinum rose 4.6% to $2.376.75 an ounce.

Palladium rose 3.3%, to $1.875.50 an ounce. (Reporting and editing by Susan Fenton in Bengaluru, with Pablo Sinha reporting from Bengaluru)

(source: Reuters)