Gold Prices Climb Amid U.S.-China Trade Tensions and Fed Rate Cut Signals

Gold prices edged higher in Asian trade on Monday, lifted by safe-haven demand as U.S.-China trade relations worsened and investors reacted to fresh signals of potential interest rate cuts by the Federal Reserve. Spot gold rose 0.8% to $3,315.68 an ounce, while August futures gained 0.7% to $3,338.52/oz.

Tensions flared after U.S. President Donald Trump accused China of breaching a trade agreement signed in Geneva, despite offering no specifics. China strongly denied the accusations and vowed to defend its national interests. This uncertainty, combined with Trump’s threat to double tariffs on steel and aluminum from 25% to 50%, triggered risk-off sentiment in global markets, driving investors toward gold and other safe assets.

The rally in gold was further supported by weakness in the U.S. dollar, following dovish comments from Federal Reserve Governor Christopher Waller. He stated that he supports rate cuts later in the year, noting that recent tariffs had minimal impact on inflation. Waller emphasized that cuts would depend on tariff levels staying relatively low, and highlighted growing concerns about the U.S. economy, citing recent Treasury market volatility.

A softer dollar boosted broader metal markets. Silver futures rose 0.6% to $33.220/oz, while copper futures on the London Metal Exchange advanced 0.7% to $9,580.85 per ton, despite weaker-than-expected Chinese PMI data for May. Platinum futures, however, slipped 0.5% to $1,050.10/oz.

Investors remain cautious amid escalating trade tensions and monetary policy uncertainty, both of which are fueling volatility across metals markets. With geopolitical risks mounting, gold continues to attract buyers seeking stability, while the Fed's dovish tone adds further upside potential for precious metals.