Gold prices climbed to a three-week high on Monday, with spot gold rising 0.93% to $5,151.44 per ounce and U.S. gold futures for April delivery advancing 1.8% to $5,173.81. The rally was driven by a combination of geopolitical tensions, macroeconomic uncertainty, and a landmark U.S. Supreme Court ruling on trade policy.
The primary catalyst was a Supreme Court decision that struck down sweeping tariffs previously imposed by President Donald Trump under emergency powers legislation. This ruling introduced fresh uncertainty into global markets, throwing existing trade deals into question. In response, President Trump announced he would raise a temporary tariff on imports from all countries from 10% to 15%, the maximum allowed under the statute.
The policy upheaval had immediate international repercussions. The European Union's trade chief stated he would propose delaying the ratification of a trade deal with Washington until there is more clarity. Indian officials postponed a planned trip to the U.S., and a member of Japan's ruling party called the situation "a real mess." This uncertainty pressured the U.S. dollar, with the Bloomberg Dollar Spot Index falling 0.2%, making gold cheaper for international buyers and reviving what market participants described as a "sell America" trade.
Investors flocked to gold as a defensive play amidst deteriorating risk sentiment. Tim Waterer, chief market analyst at KCM Trade, noted, "The court's tariff ruling has... added another layer of uncertainty to global markets, with traders again turning to gold as a defensive play." He added that future price direction depends on how long trade tensions persist and whether the U.S. engages in military action against Iran, which has indicated it may make concessions in nuclear negotiations to avert a potential attack.
Supporting gold's appeal were concerning U.S. economic data. GDP grew at just a 1.4% annualized rate in the fourth quarter, a sharp slowdown. Meanwhile, the Federal Reserve's preferred inflation gauge, the PCE index, showed prices up 2.9% year-on-year in December, remaining stubbornly above the central bank's 2% target. This reinforced expectations that the Fed may delay interest-rate cuts until at least June.
Technical analysis also pointed to strengthening momentum. Pepperstone research strategist Dilin Wu observed that gold broke through the key $5,100 level, indicating that previous resistance had become short-term support and opening up further upside potential, with the next resistance seen near $5,200.
The broader precious metals complex followed gold higher. Spot silver climbed 2.12% to $86.44 per ounce, platinum rose 0.28% to $2,168.48, while palladium edged down slightly. Vasu Menon, a strategist at Oversea-Chinese Banking Corp, cautioned that while structural factors support gold in the medium term, short-term volatility is likely given the unfolding U.S. trade policy and Iran situation.
