Gold pares gains after brief run above $4,000/oz on Trump's China tariff warning

[TradingPuzzles]

Gold pares gains after brief run above $4,000/oz on Trump's China tariff warning

Gold pared some gains on Friday after briefly rallying above the $4,000 an ounce milestone for a second time this week as U.S. President Donald Trump's warning of possible fresh tariffs on China accelerated a flight to safe-haven assets.

Spot gold was up 0.4% at $3,989.49 per ounce as of 1:40 p.m. ET (1740 GMT). The metal logged a 2.7% gain this week.

U.S. President Donald Trump said on Friday there is no reason to meet with China's President Xi Jinping in two weeks in South Korea as planned. The U.S. is calculating a massive increase in tariffs on Chinese imports, he said in a Truth Social post.
Following the news, gold briefly topped the $4,000/oz milestone, climbing to a session high of $4,022.52.
"Heating up the trade war again will tank the dollar and be good for safe-havens," said Tai Wong, an independent metals trader.

The U.S. dollar (.DXY), fell 0.5%, making greenback-priced bullion cheaper for overseas buyers.
Markets are also closely monitoring the risks related to the potential collapse of the French government and the ongoing government shutdown in the United States.

Besides, investors are anticipating the U.S. Federal Reserve to cut interest rates by 25 basis points each in October and December.
Non-yielding bullion, which hit a record high of $4,059.05 on Wednesday, is traditionally considered a hedge during times of broader uncertainty.
Geopolitical risks, alongside strong central bank gold-buying, exchange-traded funds inflows, U.S. rate cut expectations and economic uncertainties stemming from tariffs, have all contributed to gold's rally.

"On balance, there is a risk of a short-term pullback in prices given how quickly gold prices have risen in recent weeks. But over the next couple years, gold prices are likely to grind higher," Hamad Hussain, climate and commodities economist at Capital Economics, said
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Silver is also benefiting from the same factors driving gold's rally, alongside concerns about supply deficit and rising demand for the metal.

Silver rose 2.1% to $50.13 per ounce, a day after touching a record high of $51.22. It has gained more than 73% so far this year.

Silver futures on Comex for December 2025 were trading at $47.32.
"Silver's backwardation is a loud signal — physical demand is crushing paper supply... If backwardation holds and physical demand keeps rising, silver breaking and sustaining above $50 is very realistic," said Alex Ebkarian, COO at Allegiance Gold.

Backwardation is when a commodity's spot price is higher than its futures price.

Among other metals, platinum was down 1.4% at $1,596.55 and logged a weekly loss, while palladium eased 0.3% to $1,406.87, posting a more than 12.6% weekly rise.