Gold prices hit record high above $4,600/oz on Iran unrest, Fed indictment threat
Fed Chair Powell flags DOJ probe over interest rates; Trump denies involvement
’Sell America’ trade is back on as Powell subpoena rattles markets
Five things to watch in markets in the week ahead
Investing.com - Crucial inflation data will be joined by earnings from large U.S. banks this week, providing an early test of whether recent stock market enthusiasm will carry into 2026. The Federal Reserve’s independence is once again in the spotlight following a statement from Chair Jerome Powell, while unrest in Iran is adding to a surge in global geopolitical tensions so far this year and a long-awaited Supreme Court decision on U.S. tariffs could be coming in the days ahead.
1. CPI looms large
Highlighting the slate of economic indicators this week will be the December reading of U.S. consumer price growth, a commonly-used gauge of inflation.
Economists expect the consumer price index to stand at 2.7% for the twelve months to December, matching November’s pace. Month-on-month, the gauge is seen also equaling the prior month’s rate of 0.3%.
The so-called core metric, which strips out more volatile items like food and fuel, is tipped to accelerate marginally to 2.7% from 2.6% year-on-year and to 0.3% from 0.2% on a monthly basis.
Although the annualized headline CPI level would still be above the Federal Reserve’s 2% target, inflation has shown signs of stabilizing in recent months. This trend has persuaded some Fed policymakers to prioritize ratcheting down interest rates to help boost a slowing labor market.
In theory, slashing rates can bolster investment and hiring, albeit at the risk of driving up inflationary pressures.
2. Bank earnings ahead
Sentiment will also likely be swayed by a host of upcoming corporate earnings, including a fresh batch of results from major Wall Street lenders.
The largest U.S. bank,JPMorgan Chase, is set to report on Tuesday, followed by peersBank of America,CitigroupandWells Fargoon Wednesday.Goldman SachsandMorgan Stanleyare then due to announce returns on Thursday.
Coupled with the inflation data, the outcome of the bank earnings could contribute to the tone for stock markets in the early weeks of 2026.
While the benchmark S&P has risen so far this year and posted a third straight year of double-digit percentage gains in 2025, the outlook remains somewhat murky.
Fed policymakers are anticipated to cut rates again this year, although some have outlined a relatively unclear path ahead for borrowing costs in the coming months. At the same time, intensifying geopolitical strife has been one of the hallmarks of the first days of January, particularly with an audacious U.S. attack on Venezuela earlier this month and subsequent comments from the Trump administration about potential interventions in countries and regions around the world.
Robust bank earnings could help paint an upbeat picture of the state of Corporate America, and possibly alleviate some worries among more jittery investors in the process.
3. Political pressure on Fed’s Powell
On Monday, the focus was on Fed Chair Jerome Powell, who has said the Justice Department had served subpoenas to the central bank over comments he made last summer about a building renovation project.
Powell said the Justice Department had threatened to unveil a criminal indictment related to Powell’s testimony about cost overruns at a $2.5 billion renovation of the Fed’s Washington headquarters.
"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," Powell said in a statement published on the Fed’s website, adding "[t]hose are pretexts."
Instead, Powell argued that "[t]his 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."
Shortly after Powell’s statement, President Donald Trump told NBC News he did not have any knowledge of the DOJ’s investigation.
Yet new worries have arisen around the ability of the Fed -- one of the world’s most consequential central banks -- to set interest rates free of political influence. Gold has risen and the U.S. dollar has weakened in the wake of Powell’s statement.
4. Unrest in Iran
Trump’s response to a violent crackdown on protests in Iran was another source of uncertainty at the onset of the trading week.
The president has said the U.S. will meet with Iranian officials and had made contact with opposition members in the country, as he deliberates on whether military options could be used, Reuters has reported. Speaking on Air Force One, Trump said Iran "wants to negotiate."
In a briefing to foreign ambassadors, Iranian Foreign Minister Abbas Araqchi said Tehran is "ready for war but also for dialogue," Reuters said. The news agency, quoting figures from U.S.-based rights group HRANA, said 490 protesters and 48 security personnel have died during the unrest, while more than 10,600 people have been arrested.
Against this backdrop, oil prices consolidated after recent gains. Iran is a key crude producer in the Middle East, and investors have been attempting to suss out whether there could be any disruption to global supplies.
5. Supreme Court IEEPA decision awaited
Elsewhere, markets will be eagerly watching out for a decision from the U.S. Supreme Court on the legality of Trump’s sweeping import tariffs.
A ruling from the high court was initially expected to be unveiled last week, but ultimately did not arrive.
At issue is Trump’s use of the 1977 International Emergency Economic Powers Act, or IEEPA, to impose the levies on a broad range of countries. Trump initially invoked IEEPA as a measure to address the flow of the drug fentanyl into the U.S.
Recent statements on tariffs by Trump suggest that the White House is bracing for a negative outcome, analysts have said. Online betting website Polymarket now shows just about a one-in-four chance the high court will rule in Trump’s favor.
Should the tariffs be reversed, some observers have flagged that a new wave of uncertainty could surround what has been an erratic tariff agenda. One major question revolves around whether a ruling against the Trump administration would force the U.S. government to send out an estimated $150 billion in refunds for duties already paid by importers.
