Gold Prices Soar as Global Tensions Ignite Safe-Haven Demand

Gold prices surged over 2% to $3,383.70 per ounce on Monday, driven by heightened demand for safe-haven assets amid escalating global tensions, according to Bloomberg.com.

The rally follows renewed trade disputes between the US and China, with both nations accusing each other of violating a recent trade agreement, as well as President Donald Trump’s pledge to double tariffs on foreign steel and aluminum by 50%.

Concurrently, intensified conflict between Russia and Ukraine, marked by Kyiv’s drone strikes on Russian airfields and Moscow’s prolonged attacks on Kyiv, has clouded prospects for peace talks scheduled this week in Istanbul.

The Bloomberg Dollar Spot Index decreased by 0.4%, which increased gold’s attractiveness to international buyers, while other precious metals such as silver (+1.8%) and palladium (+0.46%) also experienced gains, although platinum saw a decline of 0.2%.

Trade Tensions Threaten Fragile Truce

The US-China trade landscape deteriorated further as mutual accusations of breaching a recent deal surfaced, raising fears of a renewed trade war. Trump’s announcement of 50% tariffs on steel and aluminum imports, effective immediately, prompted Canada to warn of retaliatory measures, including potential tariffs on US energy exports.

This highlights concerns that the tariffs could increase costs for US manufacturers by up to 15%, impacting industries ranging from automotive to construction.

The weakening US dollar, down 7.6% this year, has bolstered gold’s attractiveness as a hedge against currency depreciation and economic uncertainty.

ALSO READ | Trade Tensions Spark Market Jitters: Stocks Dip, Oil Surges

Geopolitical Strains Boost Gold’s Appeal

Geopolitical developments have further fueled gold’s rally. Ukraine’s drone strikes on Sunday targeted Russian airfields as far as eastern Siberia, while Moscow launched one of its most extensive attacks on Kyiv, heightening global instability ahead of peace negotiations.

These events have restored gold’s safe-haven status, which had waned since its record high of $3,500 per ounce in April. Goldman Sachs reiterated last week that gold remains a critical long-term hedge against inflation, alongside oil, with projections suggesting prices could climb to $3,600 by year-end if tensions persist.

Did You Know?
Gold has outperformed the S&P 500 in 2025, with a year-to-date gain of 27.3% compared to the index’s 12.4%, underscoring its resilience amid market volatility.

Precious Metals and Market Outlook

Other precious metals showed mixed performance, with silver rising 1.8% to $31.45 per ounce and palladium climbing 0.46% to $88.78, as tracked by the abrdn Physical Palladium Shares ETF.

Platinum, however, edged lower by 0.2% to $1,020.30. Investors are now eyeing key US labor market data, particularly Friday’s May employment report, which is expected to show a nonfarm payrolls increase of 180,000 jobs, down from April’s 233,000.

This data will influence the Federal Reserve’s next steps on interest rates, with a 60% market-implied probability of a 25-basis-point rate cut in July, according to futures pricing.