Gold News: Price Holds Firm as U.S.-China Tensions Fuel Market Uncertainty

Prices Hold Firm as Trade War, Treasury Yields, and U.S. Dollar Influence Sentiment

Gold is trading slightly higher on Tuesday as traders assess the impact of the U.S.-China trade war. While gold is not directly affected by tariffs, uncertainty continues to support prices. The metal remains just below Monday’s record high of $2,830.76, with a break above this level confirming the uptrend. A drop below $2,772.21 could signal a bull trap, while a move under $2,730.56 would shift the trend bearish. The 50-day moving average at $2,677.72 remains a key trend indicator.

At 12:45 GMT, XAU/USD is trading $2819.78, up $5.07 or +0.18%.

Trade War Escalates with New Chinese Tariffs

Gold’s safe-haven appeal remains intact as the trade war intensifies. China announced retaliatory tariffs of up to 15% on select U.S. imports following Washington’s new duties. Although measured, Beijing’s response signals potential for further escalation. Meanwhile, President Trump’s decision to pause tariffs on Mexico and Canada for 30 days offered temporary relief, but global markets remain wary of broader economic consequences.

Higher tariffs have also raised inflation concerns, with Federal Reserve officials warning that price uncertainty could slow the pace of rate cuts. Since gold is a hedge against inflation, prolonged trade disputes may provide continued support for bullion.

Treasury Yields Mixed as Markets Await U.S. Data

U.S. Treasury yields were mixed on Tuesday as investors reacted to Trump’s tariff pause and awaited key economic data. The 10-year yield rose 3 basis points to 4.581%, while the 2-year yield was nearly flat at 4.261%. Markets are watching the ADP employment report on Wednesday and Friday’s nonfarm payrolls data for further clues on labor market conditions and potential Fed policy shifts.

Bond market caution reflects uncertainty over economic growth. Weak data could boost expectations for rate cuts, supporting gold, while strong job numbers may keep rates elevated, limiting upside potential.

U.S. Dollar Holds Firm as Trade Uncertainty Persists

The U.S. dollar remained stable on Tuesday, with the dollar index at 108.5. While Trump’s pause on Mexico and Canada tariffs provided some relief, fresh 10% duties on Chinese imports added new uncertainty.

The Chinese yuan edged lower to 7.2914 per dollar in offshore trading, while the Australian dollar, often seen as a China proxy, fell 0.35% to $0.6206. The euro also weakened slightly, as traders weighed the possibility of U.S. tariffs on the EU. Higher U.S. inflation from tariffs could support the dollar by keeping interest rates elevated.

Market Forecast: Gold Holds Bullish Bias with Resistance at Record Highs

Gold’s short-term outlook remains positive, supported by trade uncertainty and inflation risks. A break above $2,830.76 could trigger further upside, while failure to sustain gains may lead to a pullback toward $2,772.21 and $2,730.56.

With Treasury yields and the dollar steady, upcoming U.S. economic data will be key in shaping gold’s next move. Strong job numbers could dampen rate cut expectations and pressure gold, while weak data may drive further gains. For now, traders remain focused on trade developments and inflation risks.

More Information in our Economic Calendar.