US justice department opens criminal probe into Federal Reserve Chairman Jerome Powell

The move represents an unprecedented escalation in President Donald Trump's battle with the Fed, an independent agency he has repeatedly attacked for not cutting its key interest rate as quickly as Mr Trump prefers.

The subpoena relates to his testimony before the Senate Banking Committee in June, Mr Powell said, regarding the Fed's 2.5 billion dollar (£1.85 billion) renovation of two office buildings, a project Mr Trump criticised as excessive.

The Fed is undertaking the first renovation of two buildings, the Eccles and 1951 Constitution Avenue buildings, since their construction in the 1930s.

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Mr Powell said in a video statement: "I have deep respect for the rule of law and for accountability. In our democracy, no one, certainly not the chair of the Federal Reserve, is above the law.

"But this unprecedented action should be seen in the broader context of the Administration's threats and ongoing pressure."

"This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings," Mr Powell said.

He added: "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."

Mr Powell claimed the threat of criminal charges is a consequence of setting interest rates based "on our best assessment of what will serve the public, rather than following the preferences of the President".

He added: "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."

Mr Trump said in an interview on Sunday that he did not have any knowledge of the Justice Department's investigation into the Fed.

"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," the president said of Mr Powell.

It comes as the president is expected to name Mr Powell's successor as chair by the end of the month.

The price of gold has soared to a new record high as concerns about fresh threats to the independence of the US central bank fuel demand for the asset.

The metal climbed by around 2% on Monday morning to a high of 4,600 US dollars (£3,415) per ounce, beating a previous record set in late December.

Rising gold prices typically indicate that investors are seeking out so-called safe haven assets.

These tend to carry less risk than other investments, such as stocks and shares, and often outperform financial markets during periods of turbulence.

Gold prices have shot up by about 70% over the past year, strengthening against broader economic and political uncertainty.