Accusing South Korea’s legislature of “not living up” to its trade deal with Washington, Trump said late on Monday he was increasing tariffs on imports from Asia’s fourth-biggest economy into the US such as autos, lumber and pharma to 25%.
Stocks appeared to take the news in their stride, with Nasdaq futures up 0.2% as investors geared up for a slew of earnings from the so-called Magnificent Seven including the likes of Microsoft, Apple and Tesla from Wednesday.
Even South Korea’s KOSPI quickly reversed earlier losses to be last up 0.8%.
Still, safe-haven gold climbed 1% to US$5,066 an ounce, just shy of an all-time high of US$5,110, while silver surged 6.4% to US$110.60 an ounce, not far from a record of US$117.70 just set on Monday.
“The frenetic nature of uncertainty coupled with a weaker dollar have been the primary contributors to this latest leg higher (for gold),” said Christopher Louney, commodity strategist at RBC Capital Markets.
“Similar major rallies of the past point to early September or mid-December based on duration alone. This means the current duration is by no means an outlier,” he said, adding that gold could hit as high as US$7,100/oz at year-end based on its 2025 performance.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%. Japan’s Nikkei was off 0.1%, tempered by the recent sharp rebound in the yen that has clouded the outlook for its vast export sector.
Chinese blue-chips were flat, while Hong Kong’s Hang Seng index gained 0.4%.
Overnight, Wall Street rose for a fourth straight session, with the S&P 500 and the Nasdaq hitting their highest level in more than a week. Much is riding on the earnings reports from US tech giants, a key test for the sustainability of the AI-driven rally.
The Federal Reserve is scheduled to deliver its latest policy decision on Wednesday where no move in interest rates is expected. The meeting will, however, be overshadowed by the Trump administration’s criminal investigation of chair Jerome Powell, whose term ends in May.
Online betting markets now attach a 50% chance to BlackRock’s bond chief Rick Rieder, an advocate of lower rates like Trump, being the likely successor.
US dollar malaise
The US dollar is coming under fire again in the first few weeks of 2026 as a growing range of factors – including Washington’s desire for a weaker currency and Trump’s erratic policymaking – prompts a rethink of investors’ optimistic assumptions for a period of stability for the greenback.
Its latest slump to over four-month lows was driven by sharp gains in the Japanese yen from Friday when chatter about rate checks by the New York Fed fuelled the risk of joint US-Japan intervention to halt the yen’s slide.
The dollar was steady at 154.30 yen on Tuesday, having lost a staggering 2.6% over the past two sessions and well below the 160 yen level seen as a line in the sand for Japanese authorities.
Against its six major currencies, the greenback was flat at 97.09, near a 4-1/2 month low of 96.8.
In the Treasuries market, the benchmark 10-year yield edged up 1 basis point to 4.225%, after falling for four straight sessions away from a recent peak of 4.313%.
Worries of another US government shutdown are also brewing in the background, with Republicans and Democrats at odds over funding for Trump’s department of homeland security after the fatal shooting of a second US citizen by federal immigration officers in Minnesota.
Oil prices were mostly flat on Tuesday. Brent crude futures slipped 0.1% to US$60.58 a barrel, while US West Texas Intermediate crude fell 0.2% to US$65.48.