Dollar Gains, Gold Weakens as US court blocks Trump’s tariffs
On Wednesday, the US Court of International Trade ruled that President Trump's actions to impose comprehensive tariffs on trade surplus countries exceeded his authority. The Trump administration has said it will appeal the decision.
Professionals pointed out that this case may be escalated to the US Court of Appeals for the Federal Circuit, which has jurisdiction over international trade disputes. If the higher courts (possibly including the Supreme Court) support it, the tariffs imposed by the Trump administration on several countries around the world since April 2 may be required to be refunded.
The ruling temporarily eased global investors' concerns about trade tensions and boosted optimism in global risk assets.
After the announcement of the decision, the US dollar rebounded sharply, and the US dollar index climbed to its highest level in more than a week, exceeding 100.50 at one point. In addition, The hawkish minutes of the Federal Open Market Committee (FOMC) released on Wednesday further boosted dollar buying and consolidated the strength of the US dollar.
Source: TradingView
On the contrary, gold prices faced huge bearish pressure and once fell below $3,250 to a low since May 20. However, continued uncertainty over U.S. trade policy and worsening U.S. fiscal conditions have limited market optimism, helping gold to stage a partial rebound. As of this writing, gold is hovering around $3,280.
Source: TradingView
Thursday will see a slew of key U.S. economic data releases, including first-quarter GDP estimates, weekly jobless claims and pending home sales. Lower-than-expected data could cap the dollar's gains. However, traders' focus remains on Friday's release of the U.S. personal consumption expenditures (PCE) price index, a key measure of inflation. Inflation data will affect market bets on the Fed's expectations of rate cuts.
Analysts warn that this market optimism could be short-lived given that the Trump administration has indicated it will continue to appeal. Uncertainty surrounding U.S. trade policy continues to weigh on market sentiment.
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