Gold Rebounds Again as Trump's 'Nixon' Defense Fails, Fed Fears Recession
Thursday, 5/29/2025 15:48
The GOLD PRICE rebounded from a sudden 1-week low on Thursday, trading back above $3300 as the US Federal Reserve put 50-50 odds on an economic recession and a US court ruled that, contrary to President Trump citing the 'Nixon Shock' tariffs of 1971, the White House's centerpiece trade and economic policy is illegal.
"That's less headwind for the global economy," Reuters quotes one commodities analyst.
"Investors get a breather from the economic uncertainty," says another, despite the Trump administration immediately filing a notice of appeal.
The approach of
Trump's Liberation Day trade-tariffs shock saw the US economy shrink by 0.2% annualized in January-to-March according to today's 2nd estimate of Q1 GDP, slightly less than first reported.
Looking ahead, "The possibility that the economy would enter a recession [is] almost as likely as the baseline forecast," said meeting minutes released Wednesday from the US Federal Reserve's
May decision to leave Dollar interest rates unchanged 3 weeks ago.
"The Fed staffers
just told us that recession odds are 50%," comments economist David Rosenberg.
"Is there an asset class anywhere remotely close to being priced for that?"
With gold rebounding from $3245 per Troy ounce overnight, US equities swiftly lost an initial 0.7% jump at Thursday's New York opening after
giant AI chipmaker Nvidia beat earnings forecasts despite the impact of Trump's trade tariff uncertainty.
Betting in the futures market meantime moved to forecast an end-2025 Fed interest rate of 3.87% per annum, back below the US central bank's own end-year rates prediction after topping it on Wednesday for the first time since mid-February.
"Don't expect a rate cut any time soon," says precious metals analyst Rhona O'Connell at brokerage StoneX, reviewing the Fed minutes.
Betting in the futures market now sees only a 1-in-20 chance of the Fed cutting interest rates when it meets in 2 weeks' time, down from a near 100% certainty during the Liberation Day trade-tariffs slump in global commodities and stock markets.
The odds of a cut in July have also sunk, now down to 1-in-4 according to the CME derivatives exchange's FedWatch tool, having begun May at 49-in-50.
Thursday's news saw the Dollar spike to 1-week highs against the rich world's other major currencies, but it then dropped 1.0% on its DXY index as gold prices rose back towards $3315 per Troy ounce.
Silver also rebounded sharply from a sudden 1-week low, regaining more than 70 cents per ounce before edging back to $33.10.
Fellow industrial precious metal platinum dipped and rallied to trade back at $1084 per Troy ounce, $20 below Monday morning's
2-year platinum price high.
Trump's Worldwide and Retaliatory Tariff Orders "exceed any authority granted to the President...to regulate importation by means of tariffs," said the New York-based Court of International Trade last night.
Finding for plaintiffs including a dozen US states led by Oregon, the court rejected the White House's submission that August 1971's imposition of 10% trade tariffs had been legal without Congress's approval following President Richard Nixon's unilateral action.
That executive order coincided with
the 'Nixon Shock' ending the Dollar's gold-exchange system.
Trump's return to the White House saw
gold rise faster than during any first 100 hundred days since Nixon's second term, which ended with his resignation over the Watergate scandal.
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