Gold rebounds sharply amid tariff tensions

10 Nisan 2025

Gold rebounds sharply amid escalating tariff tensions and Fed policy easing expectations

Written by Linh Tran, Market Analyst at XS.com

Gold prices ended yesterday’s trading session with an impressive rally, and in this morning’s session, they have surpassed the $3,100/oz mark, as global financial markets react sharply to President Donald Trump’s sudden announcement of new tariffs targeting China.

According to a statement posted on the Truth Social platform last night, President Trump declared an immediate increase in tariffs on Chinese goods to 125%, accusing Beijing of “taking advantage of the global trading system” and stating that such behavior is “no longer acceptable.”

Conversely, Trump announced a 90-day tariff suspension for more than 75 other countries, and even allowed for a reduction of tariffs to 10% during the negotiation period. This reflects a dual-track strategy by the U.S. — exerting maximum pressure on China while maintaining a more conciliatory stance toward other partners. Nonetheless, the market sees this as the beginning of a potentially prolonged period of trade instability, with gold — in its role as a safe-haven asset — benefiting directly from rising uncertainty.

If the U.S.–China trade tensions persist or extend to other major partners, gold prices could continue pushing toward new highs, potentially surpassing the all-time record recently set. Historically, every period of elevated global policy risk — from trade wars to supply chain disruptions — has created favorable conditions for a sustained gold rally. This time appears no different, especially with inflation, geopolitical risks, and monetary uncertainty also in the picture.

At the same time, the release of the March FOMC meeting minutes last night further supported gold. The minutes revealed that some Fed officials had begun discussing the possibility of cutting interest rates in 2025, should inflation continue to ease and external risks — such as geopolitics and trade — intensify. While the Fed remains cautious in its forward guidance, the overall tone was notably more dovish, reinforcing market expectations for future policy easing.

Today’s spotlight is on the March U.S. CPI report, a key data point the Fed will use to assess inflation progress. If CPI comes in below expectations, rate cut expectations will strengthen, potentially sending gold to new highs. Conversely, a surprise jump in inflation may trigger short-term corrections in gold, as policy easing expectations get pushed back.

Gold is currently supported by a combination of structural trade tensions, a more dovish Fed, and the potential for soft inflation data ahead. These factors may continue to fuel gold’s bullish momentum. However, investors should remain vigilant. Any reversal in tariff risks or shifts in monetary policy expectations could place pressure on the precious metal.

 

Zaid Barem / ymm