The US Department of Justice has opened a criminal investigation into Federal Reserve chair Jerome Powell over his congressional testimony about building renovations, sending gold and silver to record highs.
The Fed received grand jury subpoenas on Friday, threatening criminal indictment related to Powell’s testimony before the Senate banking committee in June about a $2.5bn renovation project that has exceeded its budget by a substantial margin.
The US attorney’s office for the District of Columbia is investigating whether Powell lied to Congress about the scope of renovations to Federal Reserve buildings. The probe was approved in November by attorney Jeanine Pirro, according to the New York Times.
Powell announced the investigation in a video statement on Sunday, calling it “unprecedented action” that should be seen in the “broader context of administration threats and pressure”.
“This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role; the Fed, through testimony and other public disclosures, made every effort to keep Congress informed about the renovation project. Those are pretexts,” Powell said.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.”
Powell said he will not resign and will continue doing the job the Senate confirmed him to do. “Public service sometimes requires standing firm in the face of threats,” he said.
Gold hit a record high on Monday, going above $4,600 per troy ounce. Silver also reached a record high, hitting $84.58 per ounce.
The dollar fell against major currencies whilst futures tracking the S&P 500 declined. The yield on the 10-year Treasury rose 0.03 percentage points to 4.2%.
Trump denied knowledge of the investigation in an NBC News interview on Sunday. “I don't know anything about it, but he’s certainly not very good at the Fed and he's not very good at building buildings,” Trump said.
The president has repeatedly attacked Powell for not cutting interest rates more aggressively, calling him a “stubborn mule” for declining to reduce borrowing costs. The Fed cut interest rates three times in the second half of 2025.
The Trump administration has already installed a close ally on the Fed’s board of governors and previously attempted to fire Fed governor Lisa Cook over allegations of mortgage fraud, which she denies.
Republican senator Thom Tillis, a member of the Senate banking committee, said he would oppose confirmation of anyone Trump nominated to replace Powell “until this legal matter is fully resolved”.
“If there were any remaining doubt whether advisers within the Trump administration are actively pushing to end the independence of the Federal Reserve, there should now be none,” Tillis said.
Democratic senator Elizabeth Warren said the Senate should not move forward with any Trump nominee for the Fed.
“As Donald Trump prepares to nominate a new Fed chair, he wants to push Jerome Powell off the Fed board for good and install another sock puppet to complete his corrupt takeover of America’s central bank,” Warren said.
Neil Wilson, chief markets analyst at Saxo UK, said the investigation is about Trump making clear to the next Fed chair and existing policymakers that the White House will set interest rates.
“All this uncertainty around the Fed is negative for USD and Treasuries,” Wilson said.
The investigation raises questions about the independence of the US central bank, which investors consider essential for stable financial markets. Precious metals typically gain when investors perceive threats to Fed independence.
Powell’s term as Fed chair expires in May, though he can remain on the Fed’s board of governors until 2028. Trump is expected to announce his nominee to replace Powell in the coming weeks, with White House economist Kevin Hassett seen as a frontrunner.
The Supreme Court will hear arguments later this month on a landmark case regarding the executive branch's powers to sack senior central bank officials.
The Department of Justice did not immediately respond to requests for comment from several publications.