Gold prices surged 2,5% on Wednesday as investors turned to safe-haven assets in response to escalating trade tensions and a weakening U.S. dollar. The spike followed the implementation of U.S. President Donald Trump’s sweeping "reciprocal" tariffs, which included a steep 104% duty on Chinese imports. The aggressive move has intensified concerns of a prolonged global trade war and a possible recession.
The U.S. dollar index slipped 0.6%, making dollar-denominated gold more attractive for international buyers and supporting further gains in bullion.
Beijing has so far avoided immediate retaliation, though Chinese officials have promised countermeasures and reiterated their readiness to respond firmly. China’s central bank also instructed major state-owned banks to curb U.S. dollar purchases, signaling potential currency stabilization efforts amid the turmoil.
Trade war concerns are clearly weighing on U.S. economic prospects and the market is increasingly expecting multiple rate cuts by the Fed this year, which is providing strong support for gold prices. Currently, about 60% of traders anticipate the Federal Reserve will begin cutting interest rates as early as May.
Investors are now closely watching the minutes of the Fed’s latest policy meeting, along with Thursday’s U.S. consumer price index (CPI) data. While inflation figures are important, analysts note that the greater focus is shifting toward how tariffs could influence prices and growth in the months ahead.
Gold has gained significant momentum this year, rising more than $400 in 2025 and hitting a record high on April 3. Support has also come from strong demand via gold-backed exchange-traded funds, which recorded their highest quarterly inflows since 2022, according to the World Gold Council.