Gold Prices Hold Near Record Highs Amid U.S.-China Trade War Escalation

Gold Glitters Amid Trade War Fears, but Rate Jitters Cap Gains

Gold Prices Stay Near All-Time Highs on Trade War Fears

Gold prices remained elevated in Asian trading on Tuesday, reflecting heightened global uncertainty over an escalating U.S.-China trade conflict. After climbing in overnight trade, spot gold edged up to $2,815.35 an ounce, just shy of last week’s all-time high of $2,831.70. Meanwhile, gold futures for March delivery slipped 0.4% to $2,846.64 an ounce, as investors assessed the latest geopolitical developments.

Trump Spares Canada and Mexico—But Not China

Markets initially found relief after U.S. President Donald Trump postponed a planned 25% tariff on imports from Canada and Mexico for 30 days. However, this concession did not extend to China. As of Tuesday, a fresh 10% tariff on Chinese imports officially took effect, signaling a renewed deterioration in U.S.-China relations.

China swiftly retaliated by imposing its own tariffs, tightening export controls on certain metals and blacklisting additional U.S. firms, while also launching an antitrust investigation into Google (NASDAQ:GOOGL).

Gold’s Safe-Haven Appeal Strengthens Amid Global Trade Risks

The resurgence of a trade war is reinforcing gold’s status as a safe-haven asset, as investors seek shelter from market turbulence. The stakes are particularly high given that China—America’s third-largest trading partner after Mexico and Canada—plays a dominant role in global commerce. Any further escalation could have far-reaching economic repercussions, intensifying demand for gold.

Stronger Dollar and Inflation Risks Limit Gold’s Gains

Despite the flight to safety, gold’s upside remains capped by a strengthening U.S. dollar and concerns over rising interest rates. The greenback initially weakened after the Canada-Mexico tariff delay but rebounded sharply as China’s retaliatory measures took effect.

Moreover, analysts warn that U.S. import tariffs, which are ultimately borne by domestic companies, could fuel higher inflation—a development that could push the Federal Reserve to maintain or even hike interest rates. The dollar surged to a two-year high, limiting further advances in gold prices.

Other Precious and Industrial Metals React to Market Shifts

While gold held steady, other metals faced mixed reactions:

• Platinum futures dipped 0.1% to $1,002.05 an ounce

• Silver futures slipped 0.5% to $32.350 an ounce

Meanwhile, in the industrial metals segment:

• London Metal Exchange (LME) copper futures rose 0.2% to $9,150.15 per ton

• April copper futures fell 0.1% to $4.3250 per pound

Copper traders are now closely watching China’s next economic policy moves, as the world's largest copper consumer may introduce new stimulus measures to offset the impact of U.S. tariffs.

Outlook: Will Gold Continue Its Upward March?

While gold remains a favored asset during periods of economic turmoil, its long-term trajectory will likely be influenced by Federal Reserve policy, U.S. inflation trends, and further trade war developments.

If tensions between Washington and Beijing escalate further, gold could break past record highs. However, if the Fed signals higher interest rates in response to inflation concerns, a stronger U.S. dollar could curb gold’s bullish momentum.

For now, investors remain on edge, closely watching China’s next move and its potential impact on global markets.