Gold prices rose significantly in Asian trading on Wednesday, driven by heightened safe-haven demand. This rally followed the implementation of new US tariffs, including a 104% duty on Chinese imports. The US dollar also dropped to a six-month low, further reinforcing gold’s appeal as a safe-haven asset.
Gold Gains Momentum Amid Trade Tensions
At 2:35 AM ET, spot gold increased by 1.6% to $3,031.02 per ounce, while June gold futures jumped 1.9% to $3,046.61 per ounce. Earlier in the week, gold had slipped below $3,000—its lowest since March 13—but surged again following Trump’s tariff announcement.
The new tariffs—especially the steep 104% duty—mark the most aggressive move in a series of increases on Chinese goods, some of which also saw tariffs raised by 50%.
Wider Tariff Effects Across Metal Markets
The US also imposed 20% tariffs on the EU and 24% on Japan, sparking fears of broader economic instability. China has vowed to “fight to the end” if the tariffs are fully implemented, escalating market uncertainty.
Meanwhile, central banks continue to play a key role in the gold market, reportedly buying up over a fifth of global gold supply—a level analysts call unprecedented.
The US dollar dropped 0.7% to its lowest in six months, making XAU cheaper for non-dollar buyers. Silver and platinum prices also rose by 1.8% and 0.5% respectively, while copper futures gained 0.6%, suggesting some short-term optimism.
Is Gold Still the Best Bet Amid Volatility?
Despite recent price dips, XAU remains a trusted hedge during periods of uncertainty. After hitting record highs earlier in the week, gold briefly corrected but is now poised for further gains amid ongoing recession fears.
Global Economic Concerns Drive Gold Demand
Concerns about inflation and global slowdown are pushing investors toward XAU. According to analysts, XAU is still expected to perform strongly in the coming period.
Gold is a hedge against inflation, and tariffs can drive inflation up. If a recession hits, investors will likely increase gold allocations,” said the Chief Macro Strategist at Becton Bank Australia.
Central Banks Boost XAU Purchases
After Russia’s dollar assets were frozen post-Ukraine invasion, many nations have reduced USD dependency by increasing gold reserves. Since the war began, central banks have bought over 1,000 tons of XAU annually, double the average from the previous decade.
This surge reflects global efforts to hold more stable reserves in uncertain times.
Strategic Gold Accumulation by Nations
Countries like Russia, China, and India are boosting their XAU stockpiles as a precaution against future political or economic shocks. While the US still holds the most XAU globally, other nations are clearly rebalancing their reserves.
Could the US Impose Tariffs on Gold?
Though unlikely, if the US were to tax imported XAU, domestic prices could spike, affecting American consumers. Global markets, however, may remain relatively stable due to the highly liquid nature of the XAU trade.
Gold’s role as a global safe-haven asset remains firmly intact, especially amid rising central bank demand and mounting recession fears.
Copper Slips Amid Trade Tensions
While XAU rose, copper prices dropped by 0.6% on the London Metal Exchange. As China remains the world’s largest copper consumer, any shift in its trade outlook could heavily affect copper demand and pricing.
