Gold prices surged on Tuesday, reaching new record highs. The surge came as renewed US-China trade war fears increased safe-haven demand. Investors turned to gold as the dollar weakened following President Donald Trump's tariff delay for Canada and Mexico. However, the US moved forward with tariffs on China, prompting swift retaliation.
The ongoing trade conflict between the US and China has significantly impacted global markets. While the US postponed tariffs on Canada and Mexico, it did not extend the same courtesy to China.
China responded with countermeasures, including tariffs on US goods and export restrictions on critical metals. Additionally, China expanded its list of unreliable foreign entities and launched an antitrust probe into Google. These developments fueled uncertainty, pushing gold prices upward.
Spot gold rose 1% to $2,842.77 per ounce, touching a record high of $2,845.51 earlier. Gold futures for March delivery declined by 0.6% to $2,847.04 per ounce.
Gold is a traditional safe-haven asset during times of economic uncertainty. As trade tensions escalated, investors sought security in gold.
China remains a crucial player in global trade. Despite relief for Canada and Mexico, tariffs on China have a far-reaching impact. The country is the third-largest US trading partner, following Mexico and Canada. Any disruption in this relationship affects global markets.
Although gold prices benefited from trade war fears, long-term gains remain uncertain. Rising US inflation and potential Federal Reserve interest rate adjustments could limit gold’s upside.
US tariffs are expected to raise domestic inflation as importers pass costs to consumers. A stronger dollar may also weigh on gold. The dollar recently surged to a two-year high, adding pressure to bullion prices.
Morgan Stanley economists now anticipate only one rate cut in 2025 instead of two. Analyst Michael Gapen noted that ongoing tariff uncertainty raises the bar for Fed rate cuts. A single rate cut in June now appears likely.
Other precious metals showed mixed performance. Platinum futures rose 0.8% to $1,010.95 per ounce, while silver futures climbed 1.2% to $32.90 per ounce.
Industrial metals also saw gains. London Metal Exchange copper futures rose 0.5% to $9,178 per ton. April copper futures increased 1% to $4.3633 per pound. Traders are now watching China, the world’s largest copper importer, for potential economic support to counter US tariffs.
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Gold prices surge as US-China trade war fears escalate. Safe-haven demand pushes gold to record highs. Stay updated on market trends.
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