Investing.com-- Gold prices fell Tuesday amid profit taking, though downside momentum was kept in check by concerns over higher U.S. trade tariffs and worsening relations between Washington and Beijing.

The yellow metal had risen in overnight trade, coming within spitting distance of a record high amid persistent safe haven demand. This trend was furthered by U.S. President Donald Trump signaling that he still planned to impose 25% tariffs on Canada and Mexico by next week.

This came after Trump over the weekend signed a sweeping executive order aimed at leveling more trade and investment restrictions against China, which could point to further worsening in relations

Spot gold fell 1.4% to $2,912.93 an ounce, while gold futures expiring in April fell 1.3% to $2,924.71 an ounce by 01:03 ET (06:03 GMT). Spot prices hit a record high of $2,956.37 an ounce last week.

Trump tariff threats, China jitters keep gold downside in check

Gold demand remained underpinned by Trump’s latest comments on tariffs against Canada and Mexico, both of which could be imposed as a March 4 deadline expires next week.

Such a move is likely to draw retaliatory measures from the two countries, escalating a global trade war.

Additionally, Trump’s hawkish stance against China could also draw more retaliation from Beijing. Trump had earlier in February imposed 10% tariffs on all Chinese imports, with Beijing imposing a slew of trade tariffs and export controls in retaliation.

Bloomberg reported that Trump’s administration was considering tighter controls on chip exports to China, a move that could further draw Beijing’s ire.

This was after Trump over the weekend signed a sweeping executive order seeking to further curb Chinese investments and exports.

Dollar, yields undermined by US economic fears

The dollar continued to slide this week, benefiting metal prices as investors continue to fret over a potentially cooling U.S. economy following weaker consumer confidence data released Tuesday.

The Conference Board said on Tuesday that its consumer confidence index fell to 98.3 this month, down from an upwardly-revised mark of 105.3 in January. It was the biggest monthly decline since August 2021.

This weighed on the dollar, amid bets that the Federal Reserve will have to cut rates further to support the economy. U.S. fourth-quarter GDP and inflation data due later this week is set to offer more cues on this trend.

Platinum futures rose 0.3% to $973.35 an ounce, while silver futures fell 2% to $31.952 an ounce.

Among industrial metals, benchmark copper futures on the London Metal Exchange fell 0.9% to $9,407.20 a ton, while March copper futures fell 0.2% to $4.5560 a pound.

(Ambar Warrick contributed to this story)