Gold Slides As US Court Invalidates Trump Tariffs. Forecast as of 29.05.2025
Concerns about stagflation in the US economy have become the primary catalyst for the gold rally in 2025. The current economic climate, marked by accelerating consumer prices and slowing GDP growth, creates a favorable environment for XAUUSD quotes. What if the economic landscape faces major shifts? Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The risk of stagflation was reduced due to the cancellation of universal tariffs.
- Risk hedging will increase the likelihood of a decline in XAUUSD quotes.
- The excessive appetite of China and central banks will not save the precious metal.
- Short trades on gold formed at $3,400 can be kept open.
Weekly Fundamental Forecast for Gold
Donald Trump admitted that his strategy was to set exorbitant tariffs to negotiate with a loaded gun. Coupled with lowered import duties, this dealt a severe blow to gold. In addition, following the International Trade Court’s ruling that the president exceeded his authority by imposing universal tariffs, the precious metal may face sweeping sell-offs.
Since late April, the XAUUSD has been trading within a narrow range between $3,100 and $3,400, a consequence of the interplay of various factors with opposing forces. The pressure on the precious metal was caused by three factors: high real US debt market rates, capital outflows from gold ETFs to Bitcoin ETFs, and rapid de-escalation of trade conflicts. Investors took advantage of Trump’s threats, followed by delays, to sell the precious metal at higher prices.
Capital Flows into Gold and Bitcoin ETFs
Source: Bloomberg.
At the same time, gold was bolstered by China’s insatiable appetite, central banks’ purchases, and the reluctance of metal producers to hedge against declining prices. According to Citi, the profit margin of gold mining companies exceeds 100%, marking the highest level in 50 years. As a result, approximately 0.5% of global GDP is allocated toward gold acquisitions, driven by de-dollarization initiatives, concerns regarding currency reserves, and fears of trade wars.
These factors are so influential that Goldman Sachs strongly advises its clients to hedge against the risks associated with stagflation by increasing their gold holdings and reducing their oil exposure.
Gold and Oil Prices Performance
Source: Bloomberg.
The International Trade Court’s ruling to eliminate universal tariffs represents a significant shift in the global trade landscape. If the duties prove to be less onerous than anticipated, it is unlikely that inflation in the US will escalate dramatically. However, the US economy could experience an uptick in growth due to the recently introduced fiscal stimulus package. Currently, the threat of stagflation is not a concern, implying that the XAUUSD will face increased pressure.
Meanwhile, gold mining companies may fuel the decline as they are not seeking to hedge price risks. However, this situation may not be as sustainable in the long term. The current hedging level of 180 tons is significantly lower than the 2000s level. At that time, approximately 3,000 tons were allocated to hedging, and the sale of precious metals exerted additional strain on the gold market.
Weekly Trading Plan for Gold
Until the tariff disputes are resolved and the US administration’s protectionist policy is abandoned, the precious metal will remain anchored in the range of $3,100–$3,400 per ounce. Against this backdrop, short trades formed on the growth to the upper boundary can be maintained. However, if universal import duties do disappear, this will provide grounds for selling gold at the market price.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance broker. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2014/65/EU.
According to copyright law, this article is considered intellectual property, which includes a prohibition on copying and distributing it without consent.
