Escalating trade tensions between the US and China are likely to keep commodity markets nervous, according to a Thursday note from ANZ Research.

US President Donald Trump said that the US would pause reciprocal tariffs greater than 10% on all countries apart from China for 90 days. US markets jumped sharply on Trump's newest tariff announcement.

Earlier, China had raised retaliatory tariffs on US goods to 84%, and in return, the US decided to levy a 125% tariff on goods from China.

US markets priced out rate cuts, now only around three Fed cuts priced in versus four on Tuesday, driving short-end rates there higher.

As a result, the active West Texas Intermediate oil future was up 9% at $62.74 per barrel, while gold was up 2.2% at about $3,083 per ounce.

Gold rallied to record its biggest intraday gain in five years on Wednesday. It is likely to remain well supported as a trade war between China and the US escalates, ANZ said. Investors continued to pile into gold-backed exchange-traded funds, with most of the inflows coming from China. A record 7.6 billion Chinese yuan was funneled into such funds last week, the report noted, citing data from Bloomberg.

Meanwhile, copper futures in New York rallied as much as 7% after Trump's announcement. Metal markets are likely to remain nervous, with China becoming the increasing focus of the Trump administration's trade policies, ANZ said.

Crude oil surged after Trump's announcement as well. The move sparked a risk-on tone across markets, pushing Brent crude oil futures more than 4% higher.

A relief rally sparked by the pause in US tariffs helped push energy and metal markets higher. Global gas markets failed to benefit from the relief rally on US equity markets.