Gold shot to a record high and stocks were subdued Tuesday as investors braced for further shifts in U.S. trade policy and waited to hear from Federal Reserve Chair Jerome Powell on tariffs and inflation.

Trump on Monday raised tariffs on steel and aluminum imports to 25%, pushing up share prices of U.S. steelmakers, and has promised to announce global reciprocal tariffs within days.

NEGOTIATING TACTIC

Yet he also said he was considering an exemption for Australia and that the measures would only take effect from March 4.

"Markets are assuming that Trump tariffs are a negotiating tactic, therefore they are waiting to see an actual impact from the tariffs," said George Lagarias, chief economist at Forvis Mazars.

"I think they are waiting for the smoke to clear."

Most major European share indexes were hovering around the unchanged mark. The pan-continental STOXX 600 was down less than 0.1%, while major bourses in London and Frankfurt edged up to touch new records.

In Asia, Chinese markets dipped as Beijing's retaliatory duties on U.S. energy and some goods came into effect on Monday. Hong Kong's Hang Seng fell 1.1% after earlier notching a four-month peak. The index has rallied more than 12% in a month on investor enthusiasm for artificial intelligence and chip stocks.

Mainland China stock indexes dipped slightly.

Some of the biggest movers in Hong Kong trade were electric vehicle stocks, with BYD's Hong Kong shares hitting a record high after the company rolled out free smart driving features on almost all models including its Seagull, which costs just $9,555. Shares in the rest of the sector fell heavily.

Gold hit a record peak just above $2,942 an ounce, and has rallied 63% since the low of $1,809.50 an ounce on October 23, 2023.

"Its surge reflects a combination of ongoing central bank buying to diversify away from the dollar, safe haven demand and positive momentum driving more buyers," said Shane Oliver, head of investment strategy at AMP in Sydney.

FOREX

In currency trade, the U.S. dollar index held broadly steady against peers as markets awaited Fed Chair Powell's semiannual testimony to Congress later on Tuesday.

His comments on tariffs and inflation are likely to be closely monitored, after the Fed held its interest rate steady last month following three straight rate cuts.

"The message from Powell after the January meeting was that the Fed is in no hurry to cut further as long as the economy is strong and we see no reason for him to change that message," said Elisabet Kopelman, U.S. economist at SEB.

Against the Japanese yen, the dollar was steady at 151.93 and it sat at $1.0318 per euro.

The Canadian dollar and Mexican peso had slipped slightly as those countries bear the brunt of Trump's metal tariffs.

The Chinese yuan has weakened past the 7.3 per dollar level and traded at 7.3042 on Tuesday. The Australian dollar was steady at $0.6278.

Benchmark 10-year U.S. Treasury yields edged up to 4.519%, with traders largely shrugging off - for now - Trump appearing to question U.S. government debt figures.

"The markets are likely to be wanting to see more details about what this might mean," said Mark Elworthy, head of fixed income, currency and commodity trading at Bank of America in Australia, with questions over whether Trump was possibly referring to internal departmental ownership of U.S. debt or the accounting treatment of Treasuries.

"I'm only guessing, but it will be interesting to see if more comes of this in the coming days."

U.S. crude rose 1.1% to $73.08 a barrel, while Brent crude rose 1.1% to $76.71 due to concerns over Russian and Iranian oil supply.