Gold markets entered a new phase of volatility after the U.S. Supreme Court struck down President Donald Trump’s sweeping reciprocal tariff authority, easing immediate trade-policy uncertainty and triggering a shift in risk sentiment. At the same time, Russia disclosed that its central bank reduced gold reserves in January — the first decline since October — injecting additional supply into the market. The combination briefly pressured bullion before prices stabilized, underscoring the fragile balance between fading trade fears and persistent geopolitical risk.

Trade Policy Relief Tests Safe-Haven Demand

The Supreme Court ruling effectively curtailed the administration’s ability to impose broad tariffs under emergency powers legislation. Markets interpreted the decision as reducing near-term trade escalation risk, leading to modest dollar weakness and a rotation back into risk assets. Gold slipped initially as investors recalibrated safe-haven positioning.

However, the relief may prove temporary. While sweeping reciprocal tariffs were invalidated, certain sector-specific levies remain intact, and alternative trade mechanisms could still be deployed. This limits the extent to which geopolitical and macro uncertainty truly dissipate. For gold, the ruling removes one layer of stress but does not fundamentally alter broader structural drivers such as fiscal imbalances, currency diversification trends, or geopolitical fragmentation.

Russia’s Reserve Sale Raises Supply Questions

Simultaneously, Russia’s disclosure that it sold approximately 300,000 ounces from its reserves added a new dimension to price action. Central bank buying has been a cornerstone of gold’s multi-year rally, providing a strong and consistent demand floor. Any indication of reduced sovereign accumulation tends to amplify short-term volatility.

Yet the scale of the sale remains modest relative to global daily trading volumes and cumulative central bank purchases over recent years. While the announcement may contribute to near-term price hesitation, it does not necessarily signal a structural reversal in official-sector demand. In fact, broader geopolitical tensions may still incentivize reserve diversification away from sovereign currencies and into bullion over time.

Geopolitics and Structural Demand Remain Intact

The more enduring support for gold lies in escalating geopolitical risk. The United States continues to expand its military presence in the Middle East, with the administration indicating Iran has limited time to reach a nuclear agreement. Any significant escalation could rapidly restore a risk premium to energy and commodity markets, enhancing gold’s appeal as a hedge.

Investment banks including BNP Paribas and Goldman Sachs have maintained constructive medium-term outlooks, citing central bank diversification, sustained global uncertainty, and investor demand for non-correlated assets. Meanwhile, broader macro factors — including real interest rate expectations and fiscal policy trajectories — remain central to gold’s valuation framework.

The recent volatility reflects not weakness, but repricing within a shifting risk landscape. Trade-policy relief temporarily eased defensive positioning, while reserve sales introduced marginal supply. Yet the structural case for bullion — diversification, geopolitical hedging, and monetary uncertainty — remains largely intact.

Looking ahead, investors should monitor three variables: the evolution of U.S.-Iran negotiations, real yield movements tied to Federal Reserve policy expectations, and official-sector gold purchasing trends. If geopolitical stress intensifies or central banks resume aggressive accumulation, gold could quickly reassert upward momentum. Conversely, sustained dollar strength and easing global tensions could cap near-term gains. In an environment where risk regimes change rapidly, gold’s role as both a hedge and a strategic allocation continues to face a complex but resilient outlook.