Banks Push Commodities as Fed Drama Stirs Inflation Risks
The Federal Reserve’s independence is under pressure, and markets are bracing for the fallout. Trump’s pick for Fed governor, Stephen Miran, heads to a Senate hearing Thursday, while a judge may soon decide whether Governor Lisa Cook can keep her seat after Trump tried to oust her online.
JPMorgan and Goldman Sachs say the political fight is already shaping asset flows. JPMorgan notes rising short bets on long-term Treasurys—signaling inflation fears—and a tilt toward value stocks.
In commodities, investors are eyeing gains in copper and oil if the Fed eases too much, while gold has become the clearest hedge against political interference, with futures positioning spiking.
Goldman warns that if Fed independence is eroded, investors could face higher inflation, rising yields, weaker equities, and even threats to the dollar’s reserve status. In that scenario, gold stands apart as a store of value that doesn’t rely on trust in institutions.
The bank projects gold could surge past $4,000 by 2026, with upside toward $4,500—or even $5,000 if just 1% of private U.S. Treasury holdings shift into the metal.
With gold futures already topping $3,600 this week, Goldman calls bullion its strongest bet in the commodities space.