Gold prices fell in Asian trade on Tuesday, but remained close to recent peaks as safe haven demand was underpinned by concerns over higher U.S. trade tariffs and worsening relations between Washington and Beijing.
The yellow metal had risen in overnight trade, coming within spitting distance of a record high amid persistent safe haven demand. This trend was furthered by U.S. President Donald Trump signaling that he still planned to impose 25% tariffs on Canada and Mexico by next week.
This came after Trump over the weekend signed a sweeping executive order aimed at leveling more trade and investment restrictions against China, which could point to further worsening in relations
Spot gold fell 0.5% to $2,947.73 an ounce, while gold futures expiring in April fell 0.3% to $2,952.99 an ounce by 01:03 ET (06:03 GMT). Spot prices hit a record high of $2,956.37 an ounce last week.
Trump tariff threats, China jitters buoy gold
Gold demand remained underpinned by Trump’s latest comments on tariffs against Canada and Mexico, both of which could be imposed as a March 4 deadline expires next week.
Such a move is likely to draw retaliatory measures from the two countries, escalating a global trade war.
Additionally, Trump’s hawkish stance against China could also draw more retaliation from Beijing. Trump had earlier in February imposed 10% tariffs on all Chinese imports, with Beijing imposing a slew of trade tariffs and export controls in retaliation.
Bloomberg reported that Trump’s administration was considering tighter controls on chip exports to China, a move that could further draw Beijing’s ire.
This was after Trump over the weekend signed a sweeping executive order seeking to further curb Chinese investments and exports.
Dollar, yields undermined by US economic fears
The dollar slid to an over two-month low this week, benefiting metal prices as investors also fretted over a potentially cooling U.S. economy.
Treasury yields also softened on this notion, as data over the past two weeks showed a cooling U.S. consumer sentiment and spending.
This weighed on the dollar, amid bets that the Federal Reserve will have to cut rates further to support the economy. U.S. fourth-quarter GDP data due later this week is set to offer more cues on this trend.
A softer dollar benefited metal prices, although they broadly lagged gold. Platinum futures fell 0.5% to $971.65 an ounce, while silver futures steadied at $32.623 an ounce.
Among industrial metals, benchmark copper futures on the London Metal Exchange fell 0.3% to $9,465.20 a ton, while March copper futures fell 0.4% to $4.5420 a pound.
