Gold prices trade war has become the go-to narrative in world markets after bullion gains on escalating US-China tensions. Gold prices are rallying after US President Donald Trump raised tariffs on Chinese imports to 125% even as he suspended new levies on countries such as India. This dual move has seen investors rush for gold amid concerns of inflation, rate cuts, and geopolitical upsets. As gold increased by more than 18% in 2025 and additional gains on the horizon, the precious metal is now the preferred safe haven for this trade-led chaos.
Trade war boosts bullion
Spot gold surged 0.9% on Thursday to $3,110.69 an ounce. US gold futures were higher still—1.5% to $3,126.70. These gains come on the heels of Wednesday’s surge, the largest since October 2023. Behind the surge is the latest round of US-China tariff escalation. Following China’s imposition of an 84% duty on American products, Trump responded by increasing duties on Chinese imports to 125%.
Nitesh Shah, commodities strategist at WisdomTree, put it bluntly: “We’re living in a world of extreme uncertainty. For the rest of this year, gold will march higher.”
Tariff pause brings mixed relief
Trump’s 90-day halt on new tariffs for countries like India provides temporary reprieve. Sectors such as electronics and shrimp exports can now breathe a little easier. However, tougher approach with China creates imbalances. While some countries gain, others are subjected to more volatility. This bifurcated approach is changing trade patterns and investor confidence.
The latest minutes from the US Federal Reserve captured these escalating apprehensions. Policymakers cautioned against “tough trade-offs”—high inflation on the one side, reduced growth on the other. Traders now anticipate 84 basis points of rate cuts by year-end. That generally favors gold, which does well in low-rate environments.
Investors turn to gold for safety
In turbulent times, gold shines brightest. Bolstering inflation, geopolitical tension and decelerating world growth are enticing investors to bullion. The metal has already risen more than 18% for the year. Some forecasters see it reaching $3,600 in a year—or $4,000—if uncertainty continues to grow.
As Trump doubled down on tariffs and China retaliated, the trade war isn’t letting up anytime soon. Meanwhile, the Fed is under pressure to lower rates, and supply chains worldwide are stressed. Under such circumstances, gold continues to play both roles as a fear gauge and a fiscal anchor. The “gold prices trade war” storyline will remain hot until 2025—and bullion, once more, is hogging the limelight.