Powell DOJ probe news jolted global markets on January 12, 2026, after reports that U.S. prosecutors opened a criminal investigation involving Federal Reserve Chair Jerome Powell. Gold surged to a new record near $4,600 per ounce, while the U.S. dollar weakened and equity futures fell.
What triggered the Powell DOJ probe shock
Reuters reported that the Powell DOJ probe centers on a Justice Department investigation connected to Powell’s past testimony about a Federal Reserve building renovation. Powell said the administration’s indictment threat was a “pretext” meant to pressure the Fed to cut rates.
Powell also said the Justice Department issued subpoenas the prior Friday. He framed the move as an attempt to erode central-bank independence and increase political control over monetary policy.
The White House denied direct involvement, according to Reuters, even as the dispute intensified a long-running conflict over rates.
Immediate market reaction: gold, dollar, and futures
The Powell DOJ probe headline hit the classic safe-haven complex first. Reuters said spot gold reached $4,600.33/oz, an all-time high, as investors sought protection amid institutional risk concerns.
In FX, the dollar index fell about 0.2% to 99.011, snapping a five-day winning streak. Reuters described it as the sharpest decline in roughly three weeks.
Risk assets wobbled. Reuters reported S&P 500 and Nasdaq futures slid more than 0.6%, while volatility gauges rose as traders reassessed policy credibility.
Why Fed independence is the core issue
The Powell DOJ probe matters because modern markets price U.S. assets around a baseline assumption: the Fed sets policy based on data, not political pressure. When that assumption weakens, investors can demand a higher risk premium in rates, FX, and equities.
Reuters noted that legal protections limit a president’s ability to dismiss a Fed chair, but the episode still raised worries about “unprecedented political pressure” on the institution.
Formal governance rules add nuance. Federal Reserve Board governors serve long terms and can be removed “for cause,” while the chair serves a renewable four-year term selected from among the governors.
Political spillover: Hill backlash and nominations
The Powell DOJ probe has already triggered a Senate response. Reuters reported Republican Senator Thom Tillis questioned DOJ independence and pledged to oppose new Fed nominees until the issue is resolved.
The timing is sensitive. Reuters reported Powell’s term as chair ends in May 2026, and he could remain a governor through January 2028 even if replaced as chair. That detail matters for continuity and for the Fed’s internal voting structure.
Cross-asset knock-ons: banks and the credit-card cap proposal
The Powell DOJ probe shock landed alongside fresh policy noise for lenders. Reuters reported bank stocks fell after President Donald Trump called for a one-year 10% cap on credit card interest rates, starting January 20, 2026.
Wall Street analysts told Reuters the cap is unlikely to advance because it would require congressional action, but the episode still hit sentiment around consumer-credit profitability and regulation risk.
What to watch next
The Powell DOJ probe story now has three market-moving checkpoints.
1) Official legal steps and disclosures
Investors will watch for any formal DOJ actions beyond subpoenas, and for any additional statements from the Fed or the administration. Reuters said the DOJ declined detailed comment at publication time.
2) Inflation data and the Fed meeting
Reuters reported investors were already focused on upcoming U.S. inflation data, including December CPI, ahead of the next Fed policy meeting. In an environment of heightened institutional risk, routine data can move prices more.
3) Earnings season and credit conditions
With bank earnings approaching, any sign of tightening credit or higher funding stress could amplify the Powell DOJ probe effects. Reuters linked the day’s moves to a broader repricing across rates, currencies, and financial stocks.
Bottom line
The Powell DOJ probe created a rare kind of market shock: not a growth scare, but a credibility scare. Gold’s jump above $4,600, the dollar’s slide, and the dip in equity futures all pointed to the same message. Traders were pricing a higher premium for U.S. policy uncertainty.