Gold prices climbed sharply on Monday, reaching their highest levels in nearly a month as mounting geopolitical tensions and heightened economic uncertainty prompted investors to shift funds into safe-haven assets. The price of spot gold rose by 2.6% to approximately $3,377 per ounce by 11:00 a.m. Eastern Time — its highest point since the first week of May. U.S. gold futures posted similar gains, rising 2.6% to trade just above $3,400 an ounce on the New York Mercantile Exchange. The rally in gold coincided with a decline in the U.S. dollar, which fell about 0.6% against a basket of major foreign currencies. A weaker dollar tends to make gold less expensive for overseas buyers, often boosting demand and contributing to upward price momentum.

The movement in bullion markets comes at a time of pronounced geopolitical risk and financial market uncertainty. Analysts and investors pointed to a variety of factors contributing to the market’s volatility, including renewed trade tensions between the United States and China, rising conflict in Eastern Europe, and a crowded calendar of domestic economic events that could influence Federal Reserve policy decisions.

Escalation in U.S.–China Trade Dispute

One of the key developments cited by market observers is the renewed strain in trade relations between the United States and China. President Donald Trump accused China late last week of violating the ongoing trade truce between the two countries, an allegation that was promptly denied by Beijing. In response, China issued counter-accusations, blaming Washington for breaching mutual commitments and heightening trade tensions.

These accusations were followed by a series of tariff-related policy announcements from the U.S. administration. On Friday, officials proposed to double existing tariffs on imported Chinese steel and aluminum, raising the rates to 50%. The proposal added to a growing list of economic friction points between the world’s two largest economies.

Amid the intensifying rhetoric, U.S. Treasury Secretary Scott Bessent indicated over the weekend that a phone call between President Trump and Chinese President Xi Jinping could take place soon in an attempt to resolve the issues. No date for such a call has been confirmed.

Peter Grant, Vice President and Senior Metals Strategist at Zanier Metals, said in a statement that “the latest tariff threats on Friday, including plans to double steel and aluminum tariffs to 50% along with Ukraine’s weekend attacks deep into Russia, have heightened geopolitical risks and are fuelling risk-off sentiment.”

Eastern Europe Conflict Adds to Uncertainty

Beyond the U.S.–China dynamic, the security situation in Eastern Europe remains a source of concern for investors. Over the weekend, Ukrainian forces reportedly carried out a series of long-range strikes deep into Russian territory. While the full scale and implications of the attacks remain unclear, the development added a new layer of geopolitical instability to an already fraught global environment.

This escalation is viewed by analysts as a significant contributor to Monday’s spike in safe-haven demand. Historically, periods of armed conflict or geopolitical tension tend to drive investors toward non-yielding assets like gold, which are seen as stores of value during crises.

Domestic Economic Events and Monetary Policy Uncertainty

Markets are also facing a week of significant economic data releases and potential monetary policy signals from the U.S. Federal Reserve. Chief among the data points is a critical U.S. jobs report due later in the week, which may influence policymakers’ views on interest rates and the broader economic outlook.

Investors are closely watching for any public comments from Fed Chair Jerome Powell and other Federal Open Market Committee (FOMC) members. With inflation still elevated and growth indicators mixed, the path of future interest rates remains uncertain.

Analysts say that uncertainty surrounding the U.S. debt ceiling — and the risk of another standoff in Congress — is also contributing to investor caution, with some moving capital into assets perceived as less exposed to political disruptions.

Silver Prices Rise Sharply Alongside Gold

Silver also experienced strong gains in tandem with gold. The price of silver rose more than 4% on Monday, bolstered by the same risk-averse sentiment driving the broader precious metals market. While silver often trades in the shadow of gold, its dual role as both a safe-haven asset and an industrial commodity makes it particularly sensitive to shifts in market sentiment.

The rise in silver suggests that investors are seeking diversified exposure to safe assets, particularly amid uncertainty around manufacturing supply chains that could be affected by deteriorating U.S.–China trade relations.

Equity markets reacted negatively to the rising geopolitical tensions and economic uncertainty. Major stock indices opened lower, reflecting investor anxiety over the potential impact of trade policy shifts, military conflict, and central bank actions.

The declines in equities and the drop in the U.S. dollar provided additional tailwinds for gold and silver. In times of market stress, these assets typically benefit as investors seek alternatives to more volatile or cyclical investments. While gold and silver have benefited in the short term from a confluence of risk factors, analysts caution that the outlook remains highly dependent on developments in both international diplomacy and domestic economic policy.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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