Record-breaking gold prices surge due to increasing anticipation of Federal Reserve interest rate cuts and uncertainties surrounding tariffs
In a significant development, the U.S. Court of Appeals for the Federal Circuit has ruled that President Donald Trump exceeded his authority by using emergency economic powers to impose broad-based tariffs. The court, however, allowed the tariffs to remain in place until mid-October, giving the administration time to appeal. This decision does not affect additional duties on steel, aluminum, autos, and goods, as they fall under separate authorities.
Meanwhile, the Federal Reserve (Fed) has maintained its benchmark rate in the 4.25% to 4.5% range since December. At the Jackson Hole symposium in mid-August, Fed Chair Jerome Powell hinted at a potential shift in policy. As the U.S. economy shows signs of slower inflation and weaker job growth, analysts expect the Fed to resume cuts at its next meeting on Sept. 17, with a likelihood of 89.7%. Many anticipate a 25 basis-point reduction, with the possibility of two cuts before the end of the year.
The renewed demand for gold, a traditional safe haven during economic uncertainty, has driven its price to a new record high of $3,547.09 on Asian markets on Wednesday. This surge in gold prices is fueled by expectations of monetary easing by the Federal Reserve. However, as of 5:45 a.m. GMT on Thursday, the price of gold slid back to $3,533.33 per ounce.
In trade-related news, Trump announced that his administration will seek a swift ruling from the Supreme Court to overturn a recent appellate decision on tariffs. The administration has imposed "reciprocal" tariffs on nearly all trading partners since returning to office, setting a baseline of 15%. Trump argued that removing tariffs could potentially harm the U.S. economy.
Fears over the Fed's independence have been stoked by Trump's decision to remove Federal Reserve Governor Lisa Cook last week. Trump's persistent criticism of the Fed has added to investor unease, raising concerns about the central bank's independence and its ability to make decisions based on economic conditions rather than political pressure.
Higher tariff rates have been applied on economies such as China, Canada, and Vietnam. The decision to temporarily waive tariffs on steel, aluminum, cars, and goods entering the United States was made by Trump and his administration, who have also announced exemptions and extensions on such tariffs while negotiating trade terms and considering measures under legal authorities like Section 232 of the Trade Expansion Act of 1962.
Trump announced that he could potentially harm the U.S. economy by removing tariffs. His persistent criticism of the Fed has added to investor unease at a time when the U.S. economy is showing signs of slower inflation and weaker job growth. The court's decision to allow the tariffs to remain in place until mid-October has provided a temporary reprieve, but the ongoing trade tensions continue to cast a shadow over the global economy.
Read also:
- Understanding Hemorrhagic Gastroenteritis: Key Facts
- Trump's Policies: Tariffs, AI, Surveillance, and Possible Martial Law
- Expanded Community Health Involvement by CK Birla Hospitals, Jaipur, Maintained Through Consistent Outreach Programs Across Rajasthan
- Abdominal Fat Accumulation: Causes and Strategies for Reduction
