Gold prices rose today  on safe-haven buying after US President Donald Trump reignited the trade war by raising tariffs on Chinese goods to 100% and imposing export controls on “any and all critical software”. Gold saw a dip on Friday on the heels of Israel Hamas ceasefire. The unprecedented gold price rally came to a halt on Friday, offering some relief to investors and retail jewellery buyers alike. On the occasion of Karwa Chauth, gold prices in India witnessed a sharp correction on October 10.

 US-China Trade Tensions (Escalating Uncertainty)

Renewed fears of a full-blown trade war between the United States and China are a major factor driving recent spikes in gold prices.

• Trade War Impact: Threats of new, high-rate tariffs (e.g., a potential 100% tariff on Chinese goods) and export restrictions create economic uncertainty, which investors traditionally hedge against by buying gold.
• Inflationary Pressure: Tariffs can raise the cost of imported goods, leading to inflationary pressures. Gold serves as a classic hedge against inflation, directly boosting its demand and price.
• Currency Weakness: An escalating trade dispute can cause the US Dollar (USD) to weaken relative to other currencies, which makes dollar-denominated gold cheaper for international buyers, further stimulating demand.

Hamas-Israel Conflict & Ceasefire Volatility (Risk Premium)

The conflict in the Middle East contributes a significant “geopolitical risk premium” to the price of gold.

• Safe-Haven Demand: The outbreak and escalation of the conflict (from October 2023 onward) immediately triggered a surge in gold buying as investors sought to protect capital from the sudden, high-stakes political and military instability.
• Ceasefire Impact: Reports of a US-brokered ceasefire agreement or de-escalation tend to have the opposite, negative effect, temporarily easing the geopolitical risk premium. This can cause short-term price corrections or dips in gold as market fears subside.
• Regional Spillover: The threat of the conflict spreading and disrupting global energy supplies (e.g., oil) creates potential inflationary risk, which reinforces gold’s appeal regardless of temporary ceasefires.