Gold expands losses after US court’s tariff suspension

Gold prices fell in European trade on Thursday, expanding losses for the fourth straight session and plumbing a week low under pressure from the stronger dollar against major rivals. 

The dollar was boosted after a Manhattan Federal Court suspended Trump’s reciprocal tariffs on most world countries. 

Now investors await crucial US data later today, expected to provide important clues on the odds of Fed rate cuts later this year.

Prices

Gold prices fell 1.3% to $3245 an ounce, a May 20 low, with a session-high at $3295.

On Wednesday, gold lost 0.4%, the third loss in a row on profit-taking away from a two-week high at $3365.

US Dollar

The US dollar index rose over 1% on Thursday, expanding gains for the third straight session to a two-week high at 100.54 against a basket of major rivals.

A stronger dollar makes the greenback-denominated gold futures less attractive to holders of other currencies.

The dollar’s advance is also boosted as US recession concerns decidedly diminished alongside global trade tensions.

Trump’s Tariffs Suspension 

The US Court of International Trade in Manhattan deemed US reciprocal tariffs on imports of other currencies as illegal. 

The order, judged by a three-member panel, focuses on the exclusive rights of Congress to decide on tariff policies, and not the president.

Trump’s use of emergency economic powers to impose the aggressive tariffs was deemed illegal by the court.

It’s a massive blow to Trump’s ability to use tariffs to threaten world governments with tariffs to force them to acquiesce to hit demands. 

US Rates

According to the Fedwatch tool, the odds of a June 0.25% interest rate cut by the Federal Reserve stood at just 6%.

The odds of a July rate cut stood at 25%.

Markets now expect 50 basis points of total rate cuts by the end of the year, starting October.

SPDR

Gold holdings at the SPDR Gold Trust rose 3.15 tons yesterday to a total of 925.61 tons, a May 15 high.