Gold prices declined for the fourth consecutive session in European trading on Thursday, reaching their lowest level in a week. The precious metal came under pressure from a resurgent US dollar, which gained momentum following a major court decision on tariffs.
Gold Slides on Dollar Surge
Spot gold fell by 1.3% to $3,245 per ounce—its lowest level since May 20—after reaching an intraday high of $3,295. This follows a 0.4% decline on Wednesday, marking the third straight session of losses. Analysts attribute the drop to profit-taking after prices hit a two-week peak of $3,365 earlier in the week.
Dollar Strengthens on Court Ruling
The US dollar index rose more than 1% on Thursday, climbing for the third consecutive session to a two-week high of 100.54 against a basket of major global currencies. A stronger dollar typically dampens demand for gold by making it more expensive for foreign investors.
The greenback’s rally was fueled by easing recession fears and reduced global trade tensions after a landmark ruling by a federal court in Manhattan. The US Court of International Trade ruled that former President Donald Trump’s reciprocal tariffs on imports were illegal. The three-judge panel concluded that tariff-setting powers rest with Congress, not the executive branch, effectively invalidating the tariffs imposed under Trump’s emergency economic powers.
Impact on Trade and Fed Expectations
The court’s decision is expected to ease trade tensions, further strengthening the dollar. Meanwhile, investor attention is turning to upcoming US economic data due later Thursday, which may offer more insight into the Federal Reserve’s interest rate path.
Current expectations for a June rate cut remain low, with CME Group’s FedWatch tool showing just a 6% probability for a 0.25% reduction. The odds for a rate cut in July are estimated at 25%. Markets are pricing in a total of 50 basis points in rate cuts by the end of 2025, with the first move anticipated in October.
Gold ETF Holdings Rise
Despite the pullback in gold prices, holdings in the SPDR Gold Trust—one of the largest gold-backed ETFs—rose by 3.15 tons on Wednesday, reaching 925.61 tons. This marks the highest level since May 15 and signals continued investor interest in gold as a long-term hedge.
Gold remains sensitive to macroeconomic developments, particularly interest rate decisions and currency fluctuations. As traders brace for further signals from the Federal Reserve, volatility in the gold market is expected to persist.
