Gold Gains Momentum Amid Trade Policy Uncertainty and Geopolitical Tensions

Gold prices rally as Fed patience and new US tariff disputes fuel safe-haven demand. Analysts question if the rally can be sustained amid ongoing policy flux.

The gold market is experiencing a multi-faceted boost, driven by fresh uncertainty in U.S. trade policy, a patient stance from the Federal Reserve, and escalating geopolitical concerns. Prices advanced notably during Asian trading hours. The key question for investors is whether this rally can be sustained, particularly if Washington escalates its import tariff strategy.

Monetary Policy Pause Provides Foundation

A supportive backdrop for non-yielding bullion is coming from U.S. monetary policy. Two Federal Reserve officials indicated on Tuesday they see no immediate need for policy adjustments. According to Reuters, Susan Collins of the Boston Fed suggested rates are likely to remain within the current range "for some time." Thomas Barkin from the Richmond Fed described the current policy stance as "well positioned" to manage risks.

The benchmark interest rate has held steady at 3.50% to 3.75% since January 2026, following three cuts totaling 75 basis points the previous year. Market pricing, as reflected in the CME FedWatch Tool, currently anticipates three additional 25-basis-point reductions during 2026. This environment of expected lower rates tends to favor assets like gold, which do not offer interest.

Trade Dispute Ignites Safe-Haven Demand

The immediate catalyst for market nervousness is a legal development in the United States. On Friday, the U.S. Supreme Court ruled 6-3 in Learning Resources, Inc. v. Trump that key tariff authorities used by President Trump under the International Emergency Economic Powers Act (IEEPA) were unlawful. This decision impacts all tariffs imposed under IEEPA, including the "Liberation Day" tariffs instituted in April 2025.

The administration responded swiftly. Trump signed a proclamation the same day utilizing Section 122 of the Trade Act of 1974, imposing a temporary 10% import duty for 150 days. A White House Fact Sheet confirmed the measure took effect yesterday. Although Trump announced an increase to 15%—the maximum rate allowed under Section 122—on Truth Social on February 21, reports from Bloomberg and The Guardian indicate only the 10% rate was implemented as of Tuesday.

For markets, the primary takeaway is that the specific tariff level remains in political and legal flux. This precise brand of uncertainty traditionally underpins demand for safe-haven assets such as gold.

Broad-Based Rally Across Precious Metals

During early trading, spot gold climbed approximately 1% to $5,186 per ounce (07:46 GMT), Reuters data showed. U.S. gold futures for April delivery were quoted at $5,205, a gain of 0.6%.

The rally extended across the precious metals complex. Silver surged 3.4% to $90.32, reaching a three-week high. Platinum advanced 4.7% to $2,269.82, while palladium added 1.9% to $1,801.47.

Market analyst Kyle Rodda of Capital.com told Reuters that alongside U.S. policy, the return of Chinese market participants was a factor supporting the appeal of gold and, to some extent, silver.

Geopolitics and Central Banks Add Structural Support

Additional demand stems from a heightened risk environment. In his State of the Union address yesterday, Trump outlined the potential for a military strike against Iran to prevent the country from acquiring nuclear weapons. Concurrently, Reuters reported that Iran is close to finalizing a deal to purchase Chinese anti-ship cruise missiles. A third round of nuclear talks between Iran and the U.S. is also scheduled for Thursday in Geneva.

Structurally, central bank purchasing remains a key factor. According to the World Gold Council, central banks bought a total of 863 tonnes of gold in 2025. The largest single buyer was once again Poland (102 tonnes), followed by Kazakhstan (57 tonnes) and Brazil (43 tonnes). While these purchases fell below the 1,000-tonne mark seen in prior years, they remained significantly above the 2010–2021 annual average of 473 tonnes.

Short-Term Market Catalysts to Watch

In the coming days, U.S. tariff policy is likely to set the pace—specifically, whether and when the announced increase of the Section 122 duty to 15% is formalized. Furthermore, U.S. Producer Price Index (PPI) data for January, due Friday, will be in focus for its potential to influence interest rate expectations. Thursday presents another key event: the commencement of the next U.S.-Iran negotiation round in Geneva, which could shape geopolitical risk perceptions and near-term safe-haven demand.