Gold price rallies over 3% as trade war heats up

Gold prices rallied over 3% on Wednesday as the global markets gyrated and the US dollar weakened amid escalating US-China trade tensions.

Spot gold shot up 3.3% to $3,082.15 an ounce by 10:30 a.m. ET, recovering its losses from the last three sessions. US gold futures gained 3.6% to $3,097.50 an ounce in New York.

The US dollar index, meanwhile, responded with a drop of 0.7%.

“Gold’s rebound reflects growing investor anxiety over tariff threats and the potential reshaping of global trade norms,” Christopher Wong, a foreign currency strategist at Oversea-Chinese Banking Corp., said in a Bloomberg note.

Gold’s rally followed a new round of tariffs announced by US President Donald Trump, including a massive 104% levy on Chinese goods. China retaliated by announcing an 84% tariff on US imports.

The new tariff announcements drove a dramatic selloff in US government bonds that briefly drove 10-year yields to 4.5% late Tuesday.

Like gold, US bonds are considered safe havens during uncertain times, and the selloff underscores the heightened market panic in response to Trump’s historic trade measures, which came into effect Wednesday.

“Ultimately gold continues to be seen as a hedge against instability here. We got a situation where tariffs are becoming a big problem, and you have inflationary expectations going higher, and that’s manifested by higher yields,” said Bart Melek, head of commodity strategies at TD Securities.

Bullion has risen more than 17%, or $400 an ounce in 2025, hitting multiple records along the way. Over the past week, it had been caught up in the global selloff, but remains one of the best-performing investments of the year.

The precious metal is still seen as having more upside given the strong safe-haven demand and central bank buying. Heightened market volatility may also prompt the US Federal Reserve to speed up rate cuts to prevent a recession, which bodes well for non-interest-bearing gold.

(With files from Bloomberg and Reuters)