Gold prices (XAU/USD) edged higher to around $3,080 during early Wednesday’s Asian trading session, supported by renewed safe-haven demand as escalating trade tensions between the United States and China reignite market uncertainty.
Investors sought refuge in the precious metal after US President Donald Trump announced a 90-day tariff pause for most US trade partners, reducing duties to 10% to facilitate ongoing negotiations. However, in a stark contrast, Trump sharply raised tariffs on Chinese imports to 125% with immediate effect, citing China’s “lack of respect” toward global markets.
The move has amplified concerns about rising inflation and a potential economic slowdown—conditions that typically bolster demand for gold, widely regarded as a hedge against both inflation and geopolitical risk.
“Ultimately, gold continues to be seen as a hedge against instability here,” said Bart Melek, head of commodity strategies at TD Securities. “We’ve got a situation where tariffs are becoming a big problem, and you have inflationary expectations going higher, and that’s manifested by higher yields.”
All Eyes on US Inflation Data
Looking ahead, traders are focused on the upcoming release of the US Consumer Price Index (CPI) inflation report due Thursday. A stronger-than-expected reading could lift the US Dollar, placing short-term downward pressure on the USD-denominated gold price.
Until then, gold remains underpinned by geopolitical tensions and concerns over inflation, with the market poised for fresh directional cues from the forthcoming economic data.
