Global gold prices dropped on Wednesday as investor appetite for risk surged following a key U.S. federal court ruling on trade tariffs imposed by former President Donald Trump. This shift away from safe-haven assets has reignited conversations around backing the Nigerian naira with gold reserves, as experts urge the Central Bank of Nigeria (CBN) to stabilize the local currency through gold-based monetary policy.
Gold Declines as Risk Sentiment Surges
Spot gold prices fell to $3,273.19 per ounce, while August gold futures slipped below $3,300, marking a 2.5% decline for the week. This pullback follows last week’s all-time highs and reflects increased profit-taking and a stronger U.S. dollar.
Investor optimism rose after the U.S. Court of International Trade ruled that President Trump could not impose blanket tariffs without congressional oversight. The court granted the administration 10 days to comply, although the White House promptly filed an appeal.
This ruling reduced market uncertainty, triggering a rally in risk-on assets and leading to a weakened demand for gold and the Japanese yen, both traditional safe havens.
Impact of Tariff Ruling on the Market
Market watchers interpreted the court decision as a possible step toward easing tariffs, prompting hopes of improved trade conditions and greater economic stability. Consequently, the U.S. dollar strengthened, placing additional downward pressure on gold and base metal prices.
Despite the general decline, silver futures rose by 0.5% to $33.33 per ounce, and platinum futures gained 0.2%, closing at $1,078. Copper also saw modest increases:
- London Metal Exchange copper: +0.2% to $9,586 per ton
- U.S. copper futures: +0.2% to $4.95 per pound
Thursday’s market focus will shift to updated U.S. GDP data for Q1, which could influence gold pricing further, especially if economic growth remains weak.
Nigeria Urged to Back Naira with Gold
As gold prices fluctuate globally, the Chartered Institute of Treasury Management in Nigeria has renewed calls for the Central Bank of Nigeria (CBN) to adopt a gold-backed currency policy.
Registrar Mr. Adedoyin Olumide outlined a proposal to partially support the naira with gold reserves, emphasizing the need to formalize Nigeria’s artisanal mining sector through regulation and licensing. He recommended that the CBN purchase gold directly from licensed miners to build up national reserves and reinforce economic confidence.
National Gold Purchase Program Gains Momentum
The Federal Government of Nigeria recently completed its first commercial gold transaction under the National Gold Purchase Program (NGPP), aimed at deepening gold reserves and bolstering trust in the naira. Fatimah Shinkafi, executive secretary of the Solid Minerals Development Fund, confirmed that Nigeria is looking to join other countries using local currency to buy gold as a hedge against inflation and economic uncertainty.
Nigeria–South Africa Mining Partnership and Gold Reserves
In a strategic move to expand mining operations, Nigeria signed a bilateral agreement with South Africa to strengthen collaboration across the sector. Nigeria is estimated to have 200 million metric tons of untapped gold reserves across key states such as
- Zamfara
- Osun
- Kogi
- Kwara
- Kaduna
- Bauchi
- Oyo
- Abia
Additionally, Nigeria and South Korea are partnering on mining development, including geological mapping, data gathering, and mineral exploration.
Beyond oil, Nigeria boasts 23 commercially viable mineral deposits, including lithium, iron ore, limestone, and zinc, making mineral-backed economic strategies increasingly viable.
As global risk appetite increases and gold prices soften, the conversation around backing the naira with gold gains fresh urgency. With abundant natural resources and renewed government focus on gold purchases, Nigeria may be on the path toward a more stable, resource-backed financial system.
