As tensions between the world’s two largest economies escalate, global markets are feeling the heat. From spiking gold prices to slumping oil demand and mixed signals from the US dollar, the US-China trade war is leaving few asset classes untouched.

Whether you’re a seasoned trader or just watching from the sidelines, understanding how these shifts play out across key markets is essential.

The Classic Safe Haven Gets Its Spotlight

Whenever uncertainty looms, gold tends to shine. And with two economic titans trading blows, investors are racing back to the metal.

Since November 2024, gold prices have soared by 28%, reaching an all-time high of $3,245.28 per ounce in April 2025. The surge has been driven largely by a renewed appetite for safe-haven assets amid heightened geopolitical risk.

A Shift in Investor Behavior

Chinese gold ETFs alone saw 29.1 metric tons in inflows in the first 11 days of April—surpassing the full Q1 total. It’s clear: risk-off sentiment is triggering a major pivot toward gold.

In short:

🔁 Rising tension → More demand for safety → Gold prices climb

Hit Hard by Global Slowdown Fears

Unlike gold, oil tends to suffer during conflict—especially when trade wars weigh on global industrial output and transport demand.

According to the International Energy Agency (IEA), global oil demand has dropped by 2.4 million barrels per day since January 2025, with around 60% of that decline tied to falling industrial activity in China.

Prices Reflect the Slowdown

• Brent crude has fallen nearly 4% to $70.36
• WTI slipped to $55.18, hitting levels last seen in December 2021

With global trade volumes cooling, oil is struggling to find a floor—especially as China drastically cuts its intake of US crude.

In short:

🔁 Trade disruption → Lower demand → Oil prices under pressure

The Dollar: Resilient, But Vulnerable

The US dollar often plays the role of a global lifeboat during times of stress—but its behavior this time has been less predictable.

Over the past three months:

• The S&P 500 dropped 7.96%
• The US dollar slipped 8.99%

This is unusual. Normally, when equities fall, the dollar rises on risk aversion. But here, we’re seeing a rare dual decline, reflecting uncertainty not just in stocks, but in faith in the broader US economic trajectory.

What Comes Next?

If the trade war persists and dampens growth further, the Federal Reserve may be forced to cut interest rates—which could weaken the dollar later in 2025.

In short:

✅ The dollar is currently holding firm

⚠️ There might be the risk of softness if rate cuts enter the picture.

What to Watch in the Months Ahead

The US-China standoff isn’t just a geopolitical flashpoint—it’s a structural market mover. Here’s what traders and investors should prepare for:

• Short Term: Continued volatility in gold and oil; elevated demand for safety assets
• Medium Term: Potential global growth drag, with oil remaining soft and gold staying bid
• Long Term: Structural shifts in supply chains, currency preferences, and capital allocation

This Is a Global Story, Not a Bilateral One

While the headlines focus on tariffs and diplomacy, the real impact of the trade war is playing out in commodities, currencies, and sentiment.

Gold is no longer just a hedge—it’s a barometer of anxiety. Oil isn’t just an energy source—it’s a measure of industrial health. And the dollar? It’s both a haven and a warning signal.

In times of uncertainty, it’s not just about what moves—it’s about why.

Stay informed. Stay adaptable. And above all, keep an eye on the signals beneath the noise.