USD, Oil Hit by Tariff & Shutdown Fears; Gold-Silver Ratio at 14-Year Low

Global financial markets were shaped on 26-27 January 2026 by renewed U.S. tariff actions against South Korea, escalating fears of a U.S. government shutdown, and a sharp rally in precious metals. A weakening U.S. dollar and a retreat in USDJPY reinforced risk-averse positioning, pushing gold and silver to historic levels and driving the gold-to-silver ratio to its lowest point in 14 years.

TL;DR

• The U.S. reinstated higher tariffs on South Korean imports after trade talks stalled.

• US government shutdown fears intensified amid budget deadlock in Washington. The U.S. dollar weakened, with USDJPY falling as safe-haven demand increased.

• Gold surged above $5,000, and silver climbed past $100 per ounce.

• The gold-to-silver ratio dropped to a 14-year low, highlighting silver’s outperformance.

• Oil prices dropped slightly on Monday as traders assessed the geopolitical tensions between the U.S. and Iran as well as weather conditions. 

Key Market Developments

U.S. Raises Tariffs on South Korean Goods

President Donald Trump announced an increase in tariffs on South Korean imports, citing the South Korean legislature’s delay in approving a previously negotiated trade framework. The tariff rate on select goods, including autos, lumber and pharmaceuticals, is now being restored to 25% from 15%, reversing earlier concessions after the deal was initially agreed. This reflects ongoing trade frictions as Washington pushes for legislative action on trade commitments with Seoul. (Source: AP News)

South Korean Equities and Exports Under Pressure

South Korean auto and pharmaceutical stocks experienced volatility following the tariff announcement, with major exporters like Hyundai, Kia and domestic pharma firms showing weakness before partial rebounds. The broader Kospi index showed resilience, but sector‑specific concerns reflect elevated risk in export‑dependent industries.

US Government Shutdown Risk and Market Impact

Funding Deadlock Fuels Market Anxiety

Political gridlock in Washington over federal funding, particularly related to the Department of Homeland Security, has pushed market-based shutdown probabilities to nearly 80%, according to prediction platforms. A shutdown would suspend key economic data releases, complicate Federal Reserve decision-making, and potentially weigh on near-term growth.

US Dollar Weakens as Confidence Erodes

The prospect of a shutdown weighed heavily on the U.S. dollar, which softened broadly as investors reduced exposure to U.S. assets. Concerns around fiscal governance, delayed macroeconomic data, and policy uncertainty undermined dollar demand, providing additional tailwinds for precious metals.

USDJPY Slides as Safe-Haven Demand Shifts

USDJPY moved lower as the Japanese yen attracted renewed safe-haven inflows alongside gold. The decline in the pair reflects growing caution toward U.S. fiscal stability and a broader rotation away from dollar-denominated risk exposure. Historically, periods of U.S. political uncertainty have coincided with yen strength and dollar weakness, a pattern reinforced in current market conditions.

Gold Surges Past $5,000 per Ounce

Gold prices hit fresh all‑time highs, climbing above $5,000 per ounce, as investors sought refuge from tariff risks and political uncertainty. The advance in gold reflects not only safe‑haven demand but also a weaker U.S. dollar backdrop and broader risk aversion.

Silver Breaks Above $100 per Ounce

Silver prices have also rallied strongly, topping the $100 per ounce mark,  an extraordinary level driven by a combination of safe‑haven flows and structural industrial demand. These moves underscore how precious metals remain central to investor hedging strategies in moments of fiscal and geopolitical stress.

Gold-to-Silver Ratio Hit 14-Year Low

On Monday, the gold-to-silver ratio (XAUXAG) fell to its lowest level in 14 years, signalling significant silver outperformance relative to gold. While gold remains the primary hedge against political and fiscal risk, silver’s industrial exposure has accelerated its upside, suggesting markets are pricing in both defensive positioning and longer-term structural demand growth.

Broader Context & Implications

Trade Policy Uncertainty Alongside Political Risk

The escalation in tariffs on Korean imports comes amid broader trade tensions with other partners, including Canada and Mexico, further challenging global supply chains. Political uncertainty in Washington adds another layer of market friction.

Safe‑Haven Assets Continue to Draw Interest

While past performance does not reflect future results, traders may want to note that historical patterns show that gold and silver often gain traction as stress gauges rise, particularly when fiscal or political gridlock threatens economic stability. While past shutdowns saw more muted impacts, the combination of elevated tariffs and high government shutdown probabilities has intensified safe‑haven rotations (gold, silver) in current conditions

More Markets to Keep in Mind

Besides the above, traders and investors may want to keep track of the following:

• Energy markets: Oil prices slightly dropped on Monday, erasing some of their gains from the prior session as traders assessed the impact of winter storms on U.S. crude output and the potential for tensions between the U.S. and Iran. 

• U.S. Stock Indices: Leading Wall Street index futures tied to the Dow Jones Industrial Average, S&P 500, and the Nasdaq 100, climbed on Tuesday morning (in pre-market trading) as investors await an earnings-packed week and await the Federal Reserve’s first rate decision of the year. 

Conclusion

Markets this week reflected growing stress from U.S. tariff escalation, rising government shutdown risks, and weakening confidence in the U.S. dollar. The sharp rally in gold and silver, the slide in USDJPY, and the collapse in the gold-to-silver ratio all point to a pronounced shift toward safety. Investors will closely monitor developments in Washington and trade negotiations in the days ahead, as policy outcomes are likely to remain a key driver of FX, commodity, and risk sentiment.

*Past performance does not reflect future results. The above is for marketing and general informational purposes only, and are only projections and should not be taken as investment research, investment advice or a personal recommendation.