Gold prices remained steady below the $2,900 mark during Tuesday's Asian session as investors assessed escalating trade tensions and recession concerns in the United States.
By 3:55 pm AEDT (4:55 am GMT) spot gold was little changed at US$2,891.74 per ounce.
The global trade war appears inevitable after U.S. President Donald Trump confirmed that 25% tariffs on imports from Canada and Mexico would take effect Tuesday, while an additional increase on Chinese goods to 20% has already been signed into order.
In retaliation, China’s Commerce Ministry and the Canadian Prime Minister’s Office announced countermeasures, intensifying fears of a prolonged economic conflict.
Further signs of economic weakness emerged as the U.S. ISM Manufacturing PMI dropped to 50.3 in February, missing forecasts of 50.8 and down from 50.9 the previous month.
The U.S. also dollar weakened amid the deteriorating economic outlook, while U.S. Treasury bond yields hit a five-month low.
Beyond trade concerns, geopolitical tensions continue to influence market sentiment. Trump reportedly ordered a pause on U.S. military aid to Ukraine following a heated Oval Office exchange with Ukrainian President Volodymyr Zelensky last week.
The move has created friction between the U.S. and European allies such as Britain and France, who reaffirmed their support for Ukraine at a summit in London over the weekend.
European leaders have since agreed to draft a new peace plan for the Ukraine conflict, which they plan to present to Washington in an effort to de-escalate tensions.
Markets are now turning their attention to upcoming U.S. nonfarm payrolls data, which could significantly impact Federal Reserve policy expectations, potentially supporting further gains in gold.
