Gold prices soared to a record high on Monday, while the dollar continued to weaken and global stocks showed mixed movement as investor sentiment was dampened by concerns over Donald Trump’s escalating tariff measures and his tense relationship with the Federal Reserve.
With many markets still closed for the Easter holiday, trading activity was subdued, though anticipation is building ahead of a crucial week for economic data that could reveal the early effects of the intensifying US-led trade war.
Several countries are now moving to negotiate with Washington in a bid to ease the impact of the White House’s sweeping tariffs. Japan is the most prominent among these, while US Vice President JD Vance arrived in India on Monday to begin trade talks. South Korea also announced its finance and trade ministers would hold high-level discussions in Washington this week.
However, China struck a defiant tone, warning other governments against making concessions that could harm Beijing’s interests. While most of the world faces a standard 10% tariff, China is subject to levies of up to 145% on numerous exports, prompting retaliatory duties of 125% on US goods.
“Appeasement will not bring peace, and compromise will not be respected,” a spokesperson for China’s commerce ministry said. They added that prioritising short-term self-interest over mutual benefit was akin to “seeking the skin of a tiger” — a venture doomed to failure.
China’s top diplomat, Wang Yi, urged for “openness, inclusiveness, mutual benefit and win-win” cooperation while condemning “unilateralism and trade protectionism” in all forms.
The comments follow Trump’s remarks last week that the US and China were in discussions to resolve their differences. “They’ve reached out a number of times,” he said. “I think we’re going to make a very good deal with China.”
Nevertheless, the US has recently ended a duty-free exemption for small packages from China, a move seen as targeting online retailers such as Temu and Shein. In response, DHL announced it would temporarily suspend the delivery of parcels worth more than $800 from companies to individuals in the US.
Growing fears over global economic stability have driven investors to safe haven assets, with gold reaching an all-time high of over $3,393 per ounce. The precious metal also benefited from a weaker US dollar, which came under further pressure as concerns mounted over Trump’s open clash with Federal Reserve Chair Jerome Powell.
Trump criticised Powell for warning that the tariffs were likely to result in a short-term spike in inflation and suggesting that interest rate cuts were improbable. The former president went as far as saying: “If I want him out, he’ll be out of there real fast, believe me.”
Powell, however, reaffirmed that he would not resign early, stressing that the independence of the Federal Reserve is enshrined in law.
The dollar slipped against major currencies, with the euro and yen among the strongest performers. France’s Finance Minister Eric Lombard said Trump’s aggressive trade tactics had already undermined the dollar’s global credibility, warning that ousting Powell would exacerbate the issue and potentially rattle bond markets.
Chicago Fed President Austan Goolsbee echoed these concerns, saying on Face the Nation that monetary independence from political pressure was vital, with near-unanimous support among economists for central banks to operate without interference.
Stock markets had a mixed start to the week. Tokyo’s Nikkei fell due to the stronger yen, while indices in Taipei, Jakarta and Bangkok also closed in the red. Conversely, Shanghai, Seoul, Singapore, Mumbai and Manila recorded gains.
Oil prices dipped on renewed fears about global demand. Traders are closely watching upcoming manufacturing data from major economies for signs of how the new tariffs are affecting production.
Stephen Innes of SPI Asset Management summed up the growing unease: “One thing that’s absolutely clear — and no longer debatable — is that the reputational hit to the US brand is real, and it’s not fading quietly into the next news cycle. It’s sticking.”
He added: “Investors, allies, and even central banks are starting to bake in the idea that American policymaking — both fiscal and monetary — is now a geopolitical variable, not a given.”
Key Market Figures at 0715 GMT:
- Tokyo – Nikkei 225: DOWN 1.3% at 34,279.92 (close)
- Shanghai – Composite: UP 0.5% at 3,291.43 (close)
- Hong Kong – Hang Seng: Closed for a holiday
- Euro/Dollar: UP at $1.1516 from $1.1371
- Pound/Dollar: UP at $1.3387 from $1.3270
- Dollar/Yen: DOWN at 140.85 yen from 142.33 yen
- Euro/Pound: UP at 86.04 pence from 85.68 pence
- West Texas Intermediate: DOWN 1.4% at $63.13 per barrel
- Brent Crude: DOWN 1.3% at $67.06 per barrel
- London – FTSE 100: Closed for a holiday
- New York – Dow Jones: Closed for a holiday
