Gold prices rose more than 2% on Monday, reaching their highest levels in over three weeks. The surge was driven by a weakening dollar and a combination of geopolitical risks and economic uncertainty, which fueled investor demand for safe-haven assets. As of 10:19 a.m. ET (1419 GMT), spot gold was up 2.7%, trading at $3,377.29 per ounce, marking its highest level since May 8. U.S. gold futures followed suit, rising 2.6% to $3,402.70.
Weak Dollar Boosts Gold Prices
The dollar fell 0.7% against a basket of major currencies, which made gold cheaper for holders of other currencies. This contributed to gold’s sharp rise, as investors flocked to the precious metal. As stocks also dipped amid rising trade tensions between the U.S. and China, and as global economic and political uncertainties mounted, gold continued to shine as a safe-haven investment.
Geopolitical Risks Heighten Investor Demand
The uptick in gold prices comes as tensions between the U.S. and China surged once again. On Friday, U.S. President Donald Trump accused China of violating an agreement to mutually roll back tariffs, adding to fears of an escalating trade war. These concerns, combined with recent geopolitical developments, such as Ukraine’s attacks deep into Russia over the weekend, have increased risk-off sentiment, leading investors to seek the safety of gold.
Impacts of U.S.-China Trade Tensions
Trump’s criticism of China over trade restrictions, especially regarding critical minerals, has reignited concerns over the ongoing trade war. Meanwhile, U.S. Treasury Secretary Scott Bessent signaled that a potential call between Trump and Chinese President Xi Jinping could be on the horizon, possibly aimed at easing tensions. With tariff threats hanging in the balance, including plans to double steel and aluminum tariffs to 50%, uncertainty is mounting.
Economic Factors Adding to the Gold Rush
Investor focus is also turning to economic indicators, including a crucial U.S. jobs report and an expected rate cut from the European Central Bank. Gold typically benefits in environments of low interest rates and geopolitical stress. Analysts, such as Fawad Razaqzada, market analyst at City Index and FOREX.com, highlight the favorable conditions for gold given the fiscal uncertainty and ongoing trade tensions. He noted, “This backdrop of risk aversion and fiscal uncertainty couldn’t be more favorable for gold.”
Other Precious Metals See Gains
While gold stole the spotlight, other precious metals also saw significant gains. Spot silver rose 4.1% to $34.31 per ounce, platinum increased by 0.3% to $1,059.55, and palladium climbed 1.2% to $982.40. As geopolitical risks and economic uncertainty continue to play out on the global stage, demand for these metals is expected to remain strong.
