Gold Finds Support Amid Trade Policy Uncertainty

Gold gains as new US tariffs fuel safe-haven demand and Chinese buyers return. Strong structural demand and Fed policy create a complex market outlook.

Gold is currently benefiting from a confluence of supportive factors, with trade policy taking center stage. Fresh tariffs are fueling market uncertainty, driving investors toward the traditional safe-haven asset. Simultaneously, the return of a key physical buyer from a holiday pause adds further momentum to the market.

China's Return Boosts Physical Demand

A significant short-term driver emerged this week as the mainland Chinese market reopened following the week-long Lunar New Year holiday. As one of the world's largest consumers of physical gold, the return of Chinese participants provides an immediate boost to both investment and physical demand for the metal.

Market analyst Kyle Rodda of Capital.com notes that the combination of China's market re-entry and heightened U.S. uncertainty sustains gold's appeal. The overarching theme remains: as long as fiscal and trade policies dominate headlines, demand for gold as a hedging instrument is likely to persist.

Structural Demand Provides a Solid Foundation

The longer-term outlook for gold demand appears robust, according to recent data. The World Gold Council reported global gold demand exceeding 5,000 tonnes for 2025. Notably, global ETFs saw inflows of 801 tonnes, marking the second-strongest annual inflow on record. Purchases of bars and coins reached a 12-year high, while central bank acquisitions totaled 863 tonnes for the year.

This fundamental strength is reflected in the market's technical posture. Tuesday's closing price settled at $5,192.90, positioning it approximately 8.52% above the 50-day moving average of $4,785.18. With the current price only 4.72% below the 52-week high of $5,450.00, the record level remains within striking distance.

Federal Reserve Presents a Countervailing Force

Not all developments are bullish for the precious metal. On Tuesday, two Federal Reserve officials indicated they see no immediate need for a shift in monetary policy, citing an improving labor market and persistent inflationary pressures. This stance can temper gold's momentum, as a less accommodative interest rate path tends to increase the opportunity cost of holding the non-yielding asset.

Trade Tariffs Drive Safe-Haven Flows

The primary catalyst for recent strength originates from Washington. Last week, the Supreme Court invalidated substantial portions of existing tariff measures. In response, the U.S. administration implemented a new global import levy of 10%, which took effect on Tuesday. Reuters reports that the White House is already working to raise this rate to 15%—the maximum permitted by law.

The repercussions are unfolding swiftly. The European Union has suspended ratification of its trade agreement with the U.S., and India has postponed trade talks. This chain reaction amplifies political and economic uncertainty, creating the precise environment in which gold traditionally thrives.

Sustainability Hinges on Policy and Geopolitics

The key question is whether this upward move can be sustained. The answer largely depends on two factors: whether the tariff escalation continues and if the Federal Reserve maintains its cautious stance on interest rate cuts.

Market attention will also turn to Geneva on Thursday for the third round of U.S.-Iranian nuclear talks. This geopolitical event, combined with ongoing U.S. trade policy, will likely play a decisive role in determining if gold maintains its recent momentum or enters a period of consolidation.