Gold prices rose sharply after a three-week consecutive increase, amid increasing uncertainty surrounding US trade policy that shook the market and put pressure on the USD.
The precious metal at one point increased by 2.2%, exceeding the $5,200/ounce mark. US President Donald Trump said on Saturday that he would impose a 15% global tax after the Supreme Court rejected his use of emergency power to impose a tax. The weakening USD after this development has made gold cheaper for many buyers.
The court's ruling could affect the US budget deficit as revenue from tariffs faces the risk of declining, while affecting the country's trade balance. The 15% tariff implemented by the White House to replace tariffs that have been invalidated by the court is only allowed to be applied for a maximum of 150 days and only in cases of serious international payment problems.
Recent gains have helped gold prices recover significantly after a strong sell-off at the time of the month-turn, when prices were once pulled to a record low. Gold's upward trend is supported by long-term factors, including increased geopolitical tensions and investor caution about government bonds as well as legal tenders.
There are enough structural factors to support gold prices in the medium term" - Mr. Vasu Menon, strategist at Oversea-Chinese Banking Corp - "However, in the short term, gold prices are likely to fluctuate sharply after recent surges, due to ongoing developments related to US trade policy and the situation in Iran.
The Supreme Court's ruling also casts a shadow of doubt over the agreements that the US has negotiated with major trading partners. The European Union is said to be suspending the process of ratifying an agreement with Washington until further clarification. Indian officials will postpone their visit to the US, while a member of the ruling Japanese parliament described the current situation as "a real mess".
In the Middle East, traders are closely monitoring tensions between Washington and Tehran. Although the two sides are conducting negotiations related to the possibility of reaching an agreement on Iran's nuclear program, the US deployment of large-scale military forces in the region has raised concerns about the possibility of limited attacks or even large-scale conflicts.
In this morning's trading session, gold prices increased by 2.0% to 5,170 USD/ounce. Bloomberg Dollar Spot index decreased by 0.01%. Silver prices increased by 3.7% to 87.76 USD/ounce. Platinum prices decreased slightly, while palladium prices increased.
