Miners also benefited from the rally with AngloGold Ashanti Ltd. rising as much as 5.4 per cent to its highest price in more than seven years.
US gold futures rose 0.2% to $1,487.60 an ounce.
USA gold futures too were up 0.9% at $1,497.90 an ounce. Gold prices are up 17% this year on Comex, buoyed by safe-haven demand amid US-China trade war, global growth slowdown and dovish monetary policies by major central banks. "Increasingly fiery rhetoric out of Washington and Beijing is fuelling worries that the conflict will amount to a longer-term headwind for global growth", Ilya Spivak, senior currency strategist with DailyFx said.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.21% to 836.92 tonnes on Tuesday from 835.16 tonnes on Monday. Last week, United States president Donald Trump threatened to impose additional tariffs on China's exports, which if implemented will mean that all Chinese goods entering the American soil will be subject to some kind of duties.
Last month, the Fed reduced borrowing costs for the first time in more than a decade, responding in part to the impact of the trade war.
The escalation in their dispute could mean that any interest rate cut by the Federal Reserve.
"Looking at the interest rates and general trajectory of yields and uncertainty over the trade war, gold has room to move higher from here", London Capital Group head of research Jasper Lawler told Kitco News. In Europe, investors are tracking the chances of a no-deal Brexit later this year, while there are tensions in the Middle East between Iran and the U.S. That trend shows no sign of slowing, with the People's Bank of China adding nearly 10 tons to reserves in July.
Kudlow, director of the White House National Economic Council, said on Tuesday the Trump administration wants to continue trade talks with China and is still planning to host a Chinese delegation for talks in September.