Gold (XAU/USD) prices extended gains on Monday, climbing to around US$3,320 during Asian trading, driven by growing economic uncertainty and escalating geopolitical tensions. The precious metal’s appeal as a safe-haven asset strengthened as investors reacted to trade friction and Middle East unrest.
By 3:45 pm AEST (5:45 am GMT), spot gold had risen $34.45, or 1.1%, to $3,323.96 per ounce.
The gains follow renewed strain in US-China relations after United States President Donald Trump on Friday accused China of breaching their trade agreement.
The allegation unsettled markets and increased demand for gold. In response, China denied the accusations and instead claimed that the U.S. had violated the Geneva trade agreement, suggesting that negotiations between the two economic powers have deteriorated.
Meanwhile, geopolitical developments in the Middle East further supported gold prices. According to the BBC, Ukraine claimed responsibility for its largest long-range attack of the war with Russia on Sunday, targeting 40 Russian warplanes across four military airbases using smuggled drones.
Among data releases, the latest U.S. inflation data showed signs of cooling. The personal consumption expenditures (PCE) price index - the Federal Reserve’s preferred inflation gauge - rose 2.1% year-on-year in April, easing from 2.3% in March and coming in below the 2.2% forecast.
The softer data fuelled speculation that the Federal Reserve may still consider rate cuts later in the year.
Investors now turn their attention to the U.S. ISM Manufacturing PMI report for May, due later on Monday, for further clues on the health of the American economy and its potential impact on monetary policy.
