The yellow metal gained overnight, mirroring weakness in the US dollar after President Trump delayed 25% tariffs on Canada and Mexico by 30 days. However, China received no such relief, as Trump’s 10% tariffs on Beijing took effect Tuesday. In retaliation, China imposed tariffs on select goods, tightened export controls on certain metals, added US firms to its unreliable entities list, and launched an antitrust probe into Google (NASDAQ: GOOGL).
Spot gold rose 1% to $2,842.77 an ounce after peaking at $2,845.51. March gold futures dropped 0.6% to $2,8474.04 an ounce.
Safe-Haven Demand Drives Gold Higher
Gold’s rally was fueled by concerns over a potential global trade war triggered by Trump’s tariff policies. While his delay on Canadian and Mexican tariffs provided temporary relief, China remains a key US trade partner. Given its dominance in global trade, additional tariffs could have widespread economic consequences.
Tariff Tensions May Curb Gold’s Upside
China’s retaliatory measures risk further escalation from Trump, who previously warned against counteraction.
Despite gold’s safe-haven appeal, long-term prospects remain uncertain due to potential shifts in US inflation and interest rates. Analysts warn that trade tariffs ultimately paid by US importers could drive inflation and support higher interest rates. The dollar surged to a two-year high on this outlook.
Economists at Morgan Stanley (NYSE: MS) now foresee only one rate cut in 2025, down from two previously expected.
“Tariff uncertainty raises the bar for Fed cuts. We now anticipate just one rate cut in June,” said Michael Gapen and his team at Morgan Stanley.
Precious and Industrial Metals React
Platinum futures rose 0.8% to $1,010.95 an ounce, while silver added 1.2% to $32.90 an ounce.
Copper futures on the London Metal Exchange climbed 0.5% to $9,178.00 per ton, with April copper futures gaining 1% to $4.3633 per pound.
Traders now await China’s next move as the world’s top copper importer, hoping for economic stimulus to counteract US trade tariffs.
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