Gold and Silver Analysis - Tariff Uncertainty and Weak Growth Support Upside

Key Points

• The Supreme Court ruling against IEEPA tariffs has reduced immediate trade pressure, but ongoing policy changes keep uncertainty supportive for gold and silver.
• Slowing GDP growth, low consumer sentiment, and rising inflation expectations are strengthening demand for precious metals as defensive assets.
• Gold's breakout above key resistance keeps the path open for further upside, while silver's rebound from support points to continued strength.

Background

President Trump previously justified a 10% base tariff on all trading partners and higher tariffs on Canada, Mexico, and China under a declared national emergency using the International Emergency Economic Powers Act (IEEPA) of 1977. However, a recent Supreme Court ruling (6-3) determined that the IEEPA did not grant the president the authority to impose such tariffs, arguing it would lead to an unbounded expansion of presidential power. This ruling alleviated some immediate trade pressures, resulting in gold prices rising above $5,100 an ounce.

The Yale Budget Lab estimated that lifting tariffs could reduce household cost burdens by approximately half in 2026, potentially raising consumer sentiment but not eliminating uncertainty. The administration's quick move to court to impose new tariffs under Section 122 of the Trade Act of 1974 indicates that trade tensions remain a recurring risk factor.

Economic Conditions Supporting Precious Metals

Despite trade uncertainties, economic data supports a bullish case for precious metals. Recent reports indicate that Real GDP growth dropped in the fourth quarter, and consumer sentiment remains near 60-year lows, reflecting fragile economic confidence. This environment enhances the appeal of gold and silver as protective assets.

Consumers expect inflation to rise by 3.3%, indicating persistent inflation fears. Even if businesses claim tariff refunds, these are unlikely to be passed on to consumers, limiting any real relief and maintaining high inflation expectations. Additionally, the Chicago Fed National Financial Conditions Index is at -0.56, indicating loose monetary conditions that support flows into gold and silver.

Technical Outlook for Gold and Silver

Gold

The daily chart for spot gold shows a breakout above $5,100 after a 20-day consolidation, opening the door for potential upside towards $5,600. The emergence of an ascending broadening wedge pattern suggests that the next move in gold prices will likely be higher.

Silver

Spot silver has rebounded from strong support at $72, closing the week at higher levels. The strong weekly candle and base formation above the major support of $64 indicate that silver is preparing for a significant surge, with the next move likely to be much stronger after breaking above $120.

Conclusion

Overall, while the Supreme Court ruling has alleviated some immediate tariff pressures, ongoing policy changes and new duties contribute to uncertainty that favors gold and silver. Slowing GDP growth, weak consumer sentiment, and inflation expectations further support these precious metals. From a technical perspective, gold's breakout above $5,100 suggests a potential rise to $5,600, while silver's recovery from $72 indicates continued upward movement towards $100.