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Investing.com - Gold prices jumped to fresh record highs on Monday, hovering just below the $4,100-per-ounce mark, as renewed U.S.-China trade tensions boosted the safe-haven attraction of bullion.
Spot gold rose 1.4% to $4,074.42 per ounce by 07:59 ET (11:59 GMT). U.S. gold futures climbed 2.3% to $4,093.20/oz. Silver also hit an all-time high, riding the momentum in precious metals.
Bullion prices spiked after U.S. President Donald Trump ratcheted up a trade spat with China late last week, unsettling financial markets and sending investors pouring into the perceived relative safety of gold. The yellow metal is typically viewed as a haven for investment during times of economic or political uncertainty.
Following Beijing’s announcement of expanded export controls on some rare earth materials, which serve critical roles across a host of industries, Trump threatened on Friday to place additional levies of 100% on U.S.-bound goods incoming from China.
He also warned of new U.S. export controls on "any and all critical software" by November 1, and suggested that there was no longer a reason to meet with Chinese counterpart Xi Jinping at a highly-anticipated summit in South Korea later this month. However, the planned gathering has not been scrapped.
Trump’s statements refueled concerns over the market risks posed by possibly escalating international tariffs, after a relatively quiet period since a tentative detente between the U.S. and China earlier this year.
Yet Trump has since seemingly adopted a less strident stance, saying over the weekend that everything would be "fine" and that Washington was not looking to "hurt" China.
Beijing, at the same time, backed its export curbs on rare earth elements and equipment as a necessary reaction to U.S. aggression, although it did not place new duties on U.S. items.
"This latest dispute could still blow over if cool heads prevail," analysts at Capital Economics argued in a note, adding that the planned meeting between Trump and Xi could provide "an off-ramp."
"But there is clearly a risk that both sides may dig in their heels, expecting their opponent to fold first. While China’s economy has proven more resilient in the face of U.S. tariffs than many had feared, there is still significant potential downside from a deeper rift with the U.S."
The developments around trade offset what had been some headwinds facing gold in the wake of a fragile ceasefire in a multi-year conflict between Israel and Hamas in Gaza, analysts quoted by Reuters said.
Broad expectations that the Federal Reserve will slash interest rates at its upcoming gathering on October 28-29, provided additional lift to non-yielding gold. Fed Chair Jerome Powell is due to speak at an event on Tuesday, while other policymakers are also set to make statements this week.
So far this year, gold has surged by more than 50%, fueled by a mix of factors, including Fed rate cut bets, central bank gold purchases, and strong inflows into gold-linked exchange traded funds.
(Ayushman Ojha and Reuters contributed reporting.)