Tariff rulings trigger a risk aversion wave: trade agreements fall into "chaos," and gold temporarily breaks through the $5,170 mark

Bloomberg Finance App has learned that due to the U.S. Supreme Court limiting President Trump’s tariff authority, the outlook for trade agreements negotiations with the U.S. is filled with uncertainty, causing market unease and pushing gold prices higher. Meanwhile, prospects for U.S.-Iran nuclear talks are affecting the crude oil market.

Gold prices once rose by 1.3%, breaking through $5,170 per ounce. After the Supreme Court ruled that Trump lacked the authority to use emergency powers to set reciprocal tariffs, Trump stated last Saturday that he would impose a 15% global tariff to preserve protective trade measures. The ruling led to a weakening dollar, making gold cheaper for many buyers.

The Supreme Court’s decision casts doubt on the prospects of agreements negotiated between the U.S. and its major trading partners. The European Parliament’s trade chief said he would propose delaying approval of an agreement with Washington until the situation becomes clearer; Indian officials will postpone their trip to the U.S.; and a member of Japan’s ruling party described the current situation as “a mess.”

This uncertainty has provided additional momentum for gold to recover from its sudden decline at the end of last month. As many long-term factors supporting gold prices—such as escalating geopolitical tensions and investor caution toward sovereign bonds and currencies—remain in place, the precious metal has risen for three consecutive weeks.

As of press time, gold prices increased by 1.14% to $5,162.51 per ounce. The Bloomberg U.S. Dollar Spot Index fell 0.2% on Friday and declined another 0.2% today. Silver rose 3.31% to $87.45 per ounce. Platinum and palladium also increased.

Meanwhile, prospects for U.S.-Iran negotiations are impacting the crude oil market. As investors weigh the possibility of a U.S.-Iran nuclear deal, more negotiations are expected later this week, while U.S. military forces are gathering in the Middle East, causing oil prices to dip slightly.

Brent crude oil prices approached $71 per barrel, closing nearly unchanged last Friday despite President Trump indicating he is considering limited military strikes on Iran. On Monday, WTI crude also declined.

Iranian Foreign Minister Amir Abdollahian said last Sunday that “it is now very likely to find a diplomatic solution based on a win-win game, a solution within reach.” He expects to meet with U.S. envoy Steve Vickoff in Geneva for negotiations.

Despite widespread market expectations of global oversupply, oil prices have risen earlier this year due to concerns over U.S.-Iran conflict. Traders rushed to hedge against escalating tensions, leading to a surge in futures and options trading.

“The market can tolerate headlines, but it cannot ignore real supply disruptions,” said Harris Kurshid, Chief Investment Officer at Karobaar Capital LP. “If Iran’s exports are hit, or credible disruptions occur in the Strait of Hormuz—if the situation worsens—this is very likely to happen, and oil prices will quickly reprice.”

The Strait of Hormuz is a narrow passage separating Iran from the Arabian Peninsula, through which tankers carrying oil and liquefied natural gas transit daily to global markets. Tehran only needs to disrupt transportation, without fully blocking the strait, to impact the global oil market.

Saudi Arabia, Iraq, and Kuwait all transport oil through the Strait of Hormuz, most of which is shipped to Asia. Iran produces over 3 million barrels of crude daily, about 3% of global output, most of which flows to China.

Despite concerns over escalating hostilities in the Middle East, Brent crude’s spot spread—the difference between the most recent two contracts—has narrowed within a bullish spot premium structure. This closely watched indicator was 42 cents per barrel on Monday, down from over $1 at the end of January.

“Pay attention to time spreads, diesel/kerosene inventories, and OPEC discipline,” said Kurshid of Karobaar Capital. “If refined product markets tighten or the curve enters a stronger spot premium, it tells you the situation is real.”