Gold prices rose over 2% on Wednesday as traders sought the safe-haven asset amid intensifying concerns about a global trade war and recession while a weaker dollar and the rising prospect of U.S. rate cuts lent support.

The U.S. dollar index fell 0.7%, making greenback-priced gold cheaper for overseas buyers.

U.S. President Donald Trump's reciprocal tariffs, which included a 104% duty on Chinese goods, came into effect at 0401 GMT. In response to that, China imposed 84% tariffs on U.S. goods effective from Thursday, up from the 34% previously announced.

"Trade war concerns are weighing on the prospects of the U.S. economy. Market participants are starting to price in several rate cuts by the U.S. Fed this year", which is supporting gold, said UBS analyst Giovanni Staunovo.

"We continue to see gold prices moving up to $3,200/oz over the coming months."

Nearly 60% of traders are anticipating the Fed beginning rate cuts as early as May. Zero-yield bullion tends to thrive in a low interest rate environment.

Markets are awaiting the minutes of the Federal Reserve's policy meeting later in the day, as well as the U.S. consumer price index on Thursday.

"CPI will be of less relevance, as the focus will be on how tariffs impact inflation over the coming months. As the Fed has a dual mandate, if the U.S. economy starts to weaken, we can still see rate cuts this year," Staunovo said.

Spot gold prices have continued to build on last year's gains, surging more than $400 in 2025 and hitting a record high of $3,167.57 on April 3.

Gold-backed exchange-traded funds registered the largest quarterly inflow in three years from January-March 2025, World Gold Council data showed.

Spot silver gained 2.2% to $30.49 an ounce, platinum was steady at $921.31, and palladium added 0.8% to $914.47.