Investors worldwide are turning to gold as escalating trade tensions between the U.S. and China send tremors across global markets. In a familiar flight to safety, gold prices surged on Monday, reflecting deepening concern about international economic stability and protectionist policies.
Gold prices advanced notably, with spot gold rising 0.7% to $3,311.33 per ounce and U.S. futures climbing 0.6% to settle at $3,335.40. These gains follow a series of abrupt policy shifts, including the U.S. administration’s decision to hike tariffs on key imports like aluminum and steel, with President Biden citing long-standing trade imbalances and national security concerns.
The response from China was swift and sharply worded, hinting at forthcoming countermeasures. Global investors interpreted these developments as a potential return to 2019-style trade war volatility — a period marked by slowed trade flows, disrupted supply chains, and roiled equity markets.
“This is a classic hedge play,” said Nathaniel Young, Chief Global Strategist at Everwatch Markets. “Gold becomes incredibly attractive when the outlook is murky and inflation risk is compounded by geopolitical hostility.”
Adding to the appeal of gold is a dovish signal from the U.S. Federal Reserve. Governor Christopher Waller remarked that while inflation is being monitored closely, interest rate cuts remain “on the table” if broader economic weakness emerges. These remarks have provided additional lift to gold, a commodity that generally benefits from lower interest rates due to its non-yielding nature.
The dollar also slid against major currencies, further encouraging investors to pour into gold. In addition to its role as a hedge, gold is seen as an effective store of value in inflationary and currency-volatile periods.
Performance across other precious metals was varied — silver edged up 0.3%, whereas platinum and palladium saw minor declines, weighed down by tepid industrial demand.
With investors bracing for further instability, many are increasing their allocation to gold, positioning it as a core element of a diversified defensive portfolio.
