This morning, January 12, 2026 (Vietnam time), global financial markets were shaken by the confirmation that U.S. Federal Reserve Chair Jerome Powell is officially the target of a criminal investigation. The turbulent relationship between the Trump administration and the Central Bank has escalated into a direct legal confrontation unprecedented in history.

In a surprise video message released Sunday night (U.S. time), the Fed Chair confirmed that the Department of Justice had served the agency with grand jury subpoenas on Friday. The investigation centers on Powell’s testimony before the Senate Banking Committee last June.

Federal prosecutors in Washington D.C. are meticulously reviewing spending records for the Fed’s headquarters renovation project against Powell’s public statements, seeking evidence to allege that he lied to Congress regarding the project's scope and costs.

Notably, credible sources from Reuters and the New York Times revealed that this inquiry was not a knee-jerk reaction but was approved as far back as last November by Jeanine Pirro, a close ally of President Trump. This detail reinforces Powell’s adamant argument that the construction allegations are merely a "pretext" fabricated to mask political motives.

He asserts the true reason he is being targeted is the Fed's steadfast refusal to cut interest rates as rapidly and aggressively as President Trump desires.

Facing the dual pressure of potential imprisonment and threats of civil lawsuits regarding his managerial competence from the White House, Powell has chosen to take the fight public rather than remain silent. He declared he would not resign and intends to serve out the remainder of his term, which ends in May.

Emphasizing that the core issue is not about bricks and mortar but the survival of the institution itself, Powell pledged to protect the integrity of the U.S. financial system, ensuring that monetary policy remains driven by objective economic data rather than political coercion.

Market Impact

From an investment perspective, this morning's shocking developments are painting the financial landscape in two contrasting colors. For the gold market, the precious metal stands on the verge of a significant breakout. Gold is historically the most sensitive safe haven against political risk and institutional instability.

With the Fed's independence under siege, investors fear future monetary policy could be loosened excessively for political gain, leading to unchecked inflation. This anxiety is likely to trigger a capital flight from risky assets into gold, potentially pushing prices to new highs in the short term.

Conversely, the U.S. Dollar faces the prospect of deep depreciation. The strength of the Greenback has long been anchored by global investor confidence in the stability and absolute independence of the U.S. financial system. A criminal investigation targeting the head of the Fed directly erodes that trust.

If the market believes Powell could be ousted or forced to cut rates prematurely to appease the administration, U.S. Treasury yields will fall, dragging the USD down against other major currencies.