Has tariff uncertainty peaked with the US-China deal or just paused?

Just when markets were bracing for more trade drama, the world’s two largest economies hit the pause button. The US-China tariff war, which had sent tremors through global assets, is taking a 90-day breather - and that’s got investors wondering: is the worst over, or are we simply catching our breath before another round of uncertainty and turbulence?

Gold and silver, those trusty safe-haven assets, seem unconvinced. While equity markets surged and the US dollar flexed its muscles, precious metals quietly slipped into defensive mode. So, what’s really going on here - and could the calm be more fragile than it seems?

A tariff timeout - or a turning point?

Over the weekend, US and Chinese delegations reached a surprise agreement to roll back their most aggressive tariffs for a 90-day period.

• The US will cut tariffs on Chinese imports from 145% down to 30%
  
  
• China will lower duties on US goods from 125% to 10%

Markets responded with enthusiasm. Equities soared, recession fears cooled, and risk sentiment returned with a vengeance. But here’s the kicker: many investors had only expected a vague commitment to “talks.” This was more than that - an actual rollback, even if only temporary.

So, naturally, the US dollar rallied hard. The dollar index climbed 1.5%, and safe-haven currencies like the Japanese yen took a backseat. But in this upbeat scenario, gold and silver were left out of the celebration.

Gold and Silver retreat as risk appetite returns

• Gold (XAU/USD) slid to around $3,235, pressured by a stronger dollar and rising yields.
  
  
• Silver (XAG/USD) lost over 0.40% on Monday and was flat in early Tuesday Asian trading at $32.56.

Why the pullback? When markets feel safer, they dump the “what if” hedges - and precious metals are at the top of that list. The US-China news boosted confidence just enough to make gold look a bit... well, boring.

But don’t count it out just yet.

Some say the US blinked - and the clock is ticking

Not everyone’s buying the idea that this is a true breakthrough.

“It’s 90 days - this just buys time. I think the US blinked,” said Marc Chandler, chief strategist at Bannockburn Global Forex.

His take? The US gave up its tariff leverage without extracting much in return. In other words, it’s a strategic pause - not peace. And come July, if deeper issues aren’t resolved (think tech access, subsidies, and data rights), the whole thing could unravel fast.

That’s where gold and silver could come back into play.

Inflation looms, and the Fed might not be so quick to cut

Beyond trade, the next big market driver is already queued up. 

Core CPI, which excludes food and energy, is expected to rise 2.8% year-over-year in April, unchanged from March’s four-year low. Monthly core prices are seen increasing 0.3%, up from 0.1% in March.

These numbers matter. If inflation runs hotter than expected, it could delay US Federal Reserve interest rate cuts - another reason gold may remain subdued for now.

Markets have already pushed back their expectations for the Fed’s next move, now eyeing a first 25bps cut in September, rather than July. That’s more time for the dollar to stay strong - and for gold to tread water.

Geopolitics hasn’t gone away - and could snap back fast

Even as the US-China situation simmers down, other geopolitical risks are still bubbling:

• India’s Prime Minister Modi warned operations against Pakistan are only “in abeyance”
  
  
• Ukraine’s President Zelensky signalled readiness to meet Vladimir Putin, after Trump urged him to accept talks in Turkey

Analysts foresee any escalation in these arenas could flip sentiment in a heartbeat - and send money flowing back into safe-haven metals.

So, has the uncertainty peaked - or are we just in a holding pattern?

This deal is a relief, but it doesn’t fix the long-term problems between the US and China. It’s a truce, not a treaty. And while markets are celebrating now, the underlying volatility hasn’t gone away - it could just be taking a coffee break.

For gold and silver, this means short-term weakness but long-term potential. If talks collapse, inflation ticks up, or geopolitical tensions reignite, precious metals could find themselves back in demand - fast.

Gold and silver might have taken a step back, but their role as portfolio insurance isn’t going anywhere. Especially not in a world that loves a twist.

Technical outlook:

At the time of writing, Gold is holding at a major support level with sell pressure evident on the daily chart as trade tensions ease. The sell narrative is countered by the volume bars indicating the presence of strong buy pressure around the support area that has only been pushed back by weak sellers - hinting at a potential reversal. 

Should we see a price rebound, prices could find resistance walls at $3,350 and $3,450 on their way to all-time highs of $3,500. If the slide continues past the support level, price could find new support levels at the $3,000 level.

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