(Bloomberg) — Gold advanced as the dollar slid, with investors weighing the White House’s next steps on tariffs after the US Supreme Court struck down President Donald Trump’s sweeping global tariffs.
The Supreme Court said Trump exceeded his authority by invoking a federal emergency powers law to impose his “reciprocal” tariffs across the globe as well as targeted import taxes. The ruling invalidates a large portion of the tariffs that Trump has rolled out in his second term. The ruling implied that the US Treasury may need to refund levies paid by importers and reduce future revenues, according to Bart Melek, global head of commodity strategy.
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“This should stress the budget, increasing speculation that monetary tools may need to be used to fund government, he said. “This is accretive for gold” as the possible measures will likely keep rates low. Bullion typically performs well in a low rate environment as it doesn’t pay interest.
The dollar fell as much as 0.3%, lifting gold as much as 1.6% as the precious metal is priced in the greenback.
“The market is recognizing that this is going to be a very messy legal battle for years,” said Ben McMillan of IDX Advisors, noting that the Supreme Court decision didn’t specify details around tariff refunds. “They’re pushing all of that to the lower courts. What that means is it’s gonna be a lot of individual lawsuits.”
Trump said in a Friday press conference that alternatives will be used to replace rejected tariffs. While the US Constitution gives Congress the power to levy taxes and duties, lawmakers have delegated some authority to the executive branch through a number of statutes.
Trump said he would impose a 10% global tariff under Section 122, over and above tariffs already being charged. He declared all national security tariffs under Section 232 and existing Section 301 tariffs to be in full force and effect.
Bullion wavered earlier Friday after Russia said its central bank sold gold from its reserves in January, the first decrease in since October. Central bank buying has played a crucial role in gold’s rally for the past three years, providing a strong floor to prices. With 300,000 ounces of bullion now available in the open market, it raised concerns that gold may face some near-term weakness on top of heightened volatility following a historic price plunge at the end of January.
