$Gold - main 2604(GCmain)$prices surged on Friday (February 20) during the US trading session, supported by weaker-than-expected US Q4 GDP data and fueled by market uncertainty surrounding medium- to long-term trade policy following the US Supreme Court's rejection of the Trump administration's comprehensive tariff plan. Gold closed up 2.24% at $5107.75.
The Supreme Court's rejection of the tariff policy provided the core support for trade policy uncertainty. The US Supreme Court ruled that the Trump administration's comprehensive global tariff measures under the International Emergency Economic Powers Act lacked legal authorization, rejecting this highly controversial use of presidential power. This ruling directly impacts the global trade landscape and market capital flows. The overturned tariffs represent approximately 75% of the Trump administration's total tariffs planned for 2025, with only the power to impose tariffs on specific goods such as automobiles and steel retained under the Trade Expansion Act. Independent metals trader Tai Wong stated, "On the surface, the Supreme Court ruling eliminates much of the uncertainty surrounding Trump's tariffs (and his ability to impose tariffs arbitrarily), which is good for the stock market and bad for gold." "However, it's hard to imagine the president stopping there; he will try to use other laws to reinstate tariffs, which will exacerbate market volatility. Therefore, while uncertainty may decrease in the short term, it won't hinder gold bulls in the medium term." In fact, Trump has publicly called the ruling "shameful" and clearly stated that he has backup plans. The White House has also indicated that it will immediately begin to reinstate tariffs after the ruling. The market widely expects him to reinstate targeted tariffs through other legal grounds such as the Trade Expansion Act. The continued tug-of-war on trade policy has become an important support for the safe-haven demand for gold. Following the Supreme Court ruling, major Wall Street stock indices rose sharply on Friday, and the game between risk assets and safe-haven assets further boosted gold trading activity.
Economic data reveals stagflation concerns, and the impact of Fed policy expectations is weakening. Data shows that, affected by both the government shutdown and weak consumer spending, the US economy is projected to grow sharply to an annualized rate of 1.4% in the fourth quarter of 2025, far below economists' forecasts of 3%, and a precipitous drop from the 4.4% growth rate in the third quarter. Furthermore, the Federal Reserve's preferred inflation gauge—the Personal Consumption Expenditures Index—rose 0.4% month-on-month in December, higher than the previously expected 0.3% increase, and its year-on-year increase reached 3.0%, continuing to exceed the Fed's 2% policy target. The sticky inflation and weak economic growth, coupled with concerns about stagflation, have heightened market anxieties about the fundamentals of the US economy. Bob Habercohn, senior market strategist at RJO Futures, stated, "Market inflation remains... but the slowing GDP growth indicates the economy is not yet near a turning point. Many unknowns and uncertainties remain in the US economy, which supports gold." It's worth noting that despite strong inflation data, the reality of a weak economy has not changed market expectations for a Fed rate cut. Traders still anticipate two 25-basis-point rate cuts this year, with the first expected in June. However, compared to the dual uncertainties of economic fundamentals and trade policy, the impact of Fed policy expectations on gold prices has significantly weakened.
The safe-haven appeal of gold has been activated, leading to a collective rise in precious metals. Against the backdrop of an uncertain economic outlook and significant changes in trade policy, gold's safe-haven appeal has been continuously activated. This is the core reason why it has been able to independently strengthen despite rising US stocks and short-term dollar fluctuations, rather than being solely driven by expectations of a Fed rate cut. Furthermore, in an environment where interest rates remain relatively high for an extended period and economic uncertainty intensifies, gold's asset allocation value is further highlighted.
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