The US–China Tension and Precious Metals

This is the authors' abstract. We don't add key points for this paper.

This study examines connectedness between the US–China tension (UCT) index and precious metal returns (silver, gold, platinum, palladium, rhodium) in US and China markets using a frequency-based TVP approach. Cross-spillovers account for about 48.5% of system variation, indicating moderate, short-term-dominated interdependence. Precious metals show safe-haven behavior to UCT shocks, strongest for rhodium. UCT is a net shock transmitter; platinum dominates short-term transmission, while palladium switches roles across horizons. Connectedness surges during global shocks, amplified by joint geopolitical and policy uncertainty. These results suggest that investors can exploit rhodium’s resilience, while traders and central banks should pursue flexible, time-varying diversification strategies across geopolitical regimes.