Gold prices peaked to yet another six-year high on Monday, taking a stride toward $1,600 an ounce as a fresh escalation in the US-China trade war impacted global equities, boosting demand for the traditional safe-haven assets.
Spot gold jumped 1% to $1,541.30 per ounce as of 06:19 GMT, having earlier touched $1,554.56 an ounce, its highest since April 2013.
US gold futures were up 0.9% at $1,551.80 an ounce.
“Gold was the beneficiary of President Trump’s tweetstorm on Friday", said Stephen Innes, managing partner at VM Markets, as quoted by Reuters.
Equity markets nosedived in response, with US stocks plunging on Friday, and Asian ones following on Monday.
As gold’s rally gathers pace, investors have been pushing into bullion-backed exchange-traded funds, which have hit the highest since 2013, with data compiled for Bloomberg suggesting holdings are set for a third monthly climb.
Gold is projected to continue to soar, as investors seek havens from trade tensions and further Fed easing, claim market analysts.
Traders were reportedly tracking the G7 summit in France, where Trump indicated he may have had second thoughts on the tariffs.
Fresh Spiral in US-China Trade Standoff
Earlier, in a fresh spiral of the raging tit-for-tat trade war between Washington and Beijing, on 23 August US President Donald Trump announced a hike on existing tariffs on $250 billion worth of Chinese goods from 25 percent to 30 percent on 1 October.
In addition, the tariffs would be raised from the planned 10 percent to 15 percent on the remaining $300 billion worth of Chinese goods as of 1 September.
Trump subsequently took to Twitter to emphasise the retaliatory nature of his move:
"China should not have put new Tariffs on 75 BILLION DOLLARS of United States product [sic] (politically motivated!)"
...unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30%...— Donald J. Trump (@realDonaldTrump) August 23, 2019
Trump's move came hours after Beijing decided to impose a new batch of 10 and 5 percent tariffs on $75 billion worth of US imports starting from 1 September and 15 December respectively.
China's restrictions target a number of US goods, including soybeans, wheat, corn, beef, pork, and crude oil.
Later, however, the White House clarified that the US president wished he had raised tariffs on Chinese goods even higher.
On Monday the Chinese Ministry of Foreign Affairs issued a statement saying that Beijing would take the necessary responsive measures to a proposed US tariff hike on Chinese goods.
"This US step is a serious violation of agreements made in Osaka between the two leaders. Threats and intimidation won't work with China… If the US really resorts to the move, China will continue taking the necessary measures to ensure its rights and interests”, the Chinese ministry said.