Gold prices climbed to their highest level in over a week, driven by safe-haven demand amid renewed U.S. tariff threats and escalating tensions between Russia and Ukraine. Spot gold rose by 2% to $3,353.29 per ounce, reaching its highest point since May 23. U.S. gold futures also increased by 1.9% to $3,378.40.
The dollar weakened by 0.6% against its rivals after President Trump indicated plans to double tariffs on imported steel and aluminum to 50%. China responded to accusations of violating an agreement on critical mineral shipments. A weaker dollar typically makes gold more attractive to holders of other currencies.
UBS analyst Giovanni Staunovo noted that risk aversion due to declining Asian equities and rising geopolitical tensions, including the escalation between Ukraine and Russia, are boosting demand for safe-haven assets like gold. Ongoing trade tensions between China and the U.S. are providing additional support.
The surge in gold prices contrasts sharply with the performance of industrial metals like copper, aluminum, and zinc, which have declined by an average of 10% in the past year. This divergence is seen by some analysts as a potential warning sign for the global economy. However, some analysts suggest gold is in a bubble, driven by inflation concerns and central banks diversifying away from the U.S. dollar.
Federal Reserve Chairman Jerome Powell is scheduled to speak, and markets are awaiting remarks from other Fed officials this week for insights into monetary policy perspectives. Gold is traditionally considered a safe-haven asset during times of geopolitical and economic uncertainty and tends to perform well in low-interest-rate environments.