US Court Rules Against Trump’s Tariff Authority
The US Court of International Trade has determined that former President Trump exceeded his legal powers by imposing tariffs on foreign nations. The court highlighted that these reciprocity-based tariffs surpassed the authority granted under the International Emergency Economic Powers Act (IEEPA). Following the ruling, the Trump administration promptly filed an appeal. During the appeal process, the Federal Court of Appeals issued a temporary stay on the court’s decision.
In response to the ruling, Trump expressed his dissatisfaction via his Truth Social account, labeling the decision as ‘incredible’ against the US. He further accused China of breaching its trade agreement with the US. Analysts observed that such frequent policy changes and the absence of a comprehensive trade agreement continue to restrict risk appetite, complicating investment decisions amid global economic and geopolitical uncertainties.
Rising Risk Appetite Affects Precious Metals
Recent macroeconomic data influenced commodity market pricing, with significant attention on upcoming US employment data and the European Central Bank’s (ECB) interest rate decision. The US core PCE inflation data fell short of expectations at 2.1% annually, fostering speculation that the Federal Reserve might refrain from raising interest rates. This scenario impacted long-term pricing in interest-sensitive assets like gold, though the dollar’s strength exerted short-term pressure.
Consequently, the US 10-year bond yield dropped 12 basis points to 4.40%, while the dollar index rose 0.2% to 99.3%. This limited increase in the dollar index, coupled with heightened market risk appetite, led to declines across precious metals. Analysts noted that the US International Trade Court’s decision to nullify Trump-era tariffs redirected investors towards riskier assets, weakening demand for safe havens.
Consequently, all precious metals experienced declines: platinum fell by 3.5%, gold by 2%, palladium by 2.4%, and silver by 1.5%.
Weak PMI Data Impacts Base Metals
Base metals faced depreciation amid increasing concerns about production declines stemming from macroeconomic data signals. In China, the Manufacturing Purchasing Managers’ Index (PMI) for May stood at 49.5, indicating contraction. Weak manufacturing demand pressured base metal prices due to fears of reduced production.
Despite the US postponing tariffs on European goods, ongoing court proceedings presented a short-term reprieve, yet tariff uncertainties persisted as a risk factor. Consequently, over-the-counter base metal prices decreased: copper by 3.3%, lead by 1%, aluminum by 1.5%, zinc by 2.6%, and nickel by 0.6%.
OPEC+ Decides on Production Increase
For the second consecutive week, oil prices dropped amid expectations of increased production from OPEC+ in July and uncertainties from US tariff-related court rulings. Anticipation of an OPEC+ production increase, potentially exceeding previous decisions, pressured oil prices throughout the week.
At their recent meeting, OPEC+ agreed to a daily production increase of 411,000 barrels in July, aiming to regain market share and address overproduction. The eight OPEC+ members, collectively producing over 5% of global demand, had previously increased production in April and further escalated it in July, enhancing supply.
Consequently, Brent oil prices fell by 2.9%, while natural gas prices on the New York Mercantile Exchange rose by 3.8%.
EU Lowers Forecast Amid Agricultural Trends
Agricultural commodity prices trended downward, aside from rice, amid supply news and tariff uncertainties. In Brazil, corn harvests progressed slowly, while Argentina’s dry and cold weather expedited soybean harvests and supported winter wheat planting.
The European Union reduced its total cereal production forecast for the 2025/26 season to 279.6 million tons due to drought. In Ukraine, anticipated higher wheat prices for the new season were driven by weather-related risks. Canada revised its wheat production forecast downward due to inadequate soil moisture.
Meanwhile, Malaysia reiterated its B30 biodiesel utilization target, with sustainable production growth expected to bolster demand for soybean oil and similar raw materials. In the same period, Chicago Mercantile Exchange prices per bushel decreased for soybeans by 1.7%, corn by 3.5%, and wheat by 1.7%, while rice prices increased by 2.5%.
Coffee prices faced pressure as new harvests began in Vietnam and Brazil, increasing supply. On the Intercontinental Exchange in the US, sugar prices fell by 1.1%, cotton by 1.5%, and coffee by 5.2%. Cocoa ended the week down 0.1% per ton.
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