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Spot gold was up 1.5% at $3,129.33 an ounce, as of 0514 GMT. In the previous session, bullion recorded its best day since October 2023. U.S. gold futures climbed 2.2% to $3,145.80.
U.S. President Donald Trump said on Wednesday that he would raise the tariff on Chinese imports to 125% from 104%. The world's two largest economies have engaged in a series of tit-for-tat tariffs over the past week.
However, Trump decided to temporarily lower the hefty duties he recently imposed on several countries.
"If we enter a slow growth period, which is our base case, we think rates will eventually head lower and push gold higher since inflation worries will still be with us for much of the year due to tariff impacts," Marex analyst Edward Meir said.
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"Eventually we do see $3,200 possibly by month-end, if not earlier."
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Gold, a hedge against global uncertainties and inflation, has risen more than 18% in 2025, driven largely by Trump's tariff plans, expectations of interest rate cuts by the Federal Reserve, geopolitical tensions in the Middle East and Ukraine, strong central bank buying, and increased investments in gold-backed exchange-traded funds.
According to minutes from the Fed's latest meeting, policymakers were nearly unanimous last month in warning that the U.S. economy faced risks of higher inflation alongside slower growth, with some noting "difficult tradeoffs" may lie ahead.
Non-yielding bullion stands to lose its appeal if inflationary pressures force the Fed to keep interest rates higher.
Traders now await data from the U.S. Consumer Price Index, due later in the day, and the Producer Price Index print on Friday.
Spot silver gained 0.6% to $31.21 an ounce, platinum lost 0.3% to $935.54, and palladium shed 1% to $922.00.
