Gold Prices Surge Nearly 2% Amid Geopolitical and Trade Tensions

Gold prices experienced a significant uptick on Monday, climbing nearly 2% as investors flocked to the safe-haven asset amid rising geopolitical tensions and renewed trade war fears. The surge was primarily driven by escalating conflicts in Eastern Europe and the U.S.'s announcement of increased tariffs on imported metals, which have heightened market volatility and uncertainty.

Market Overview

As of Monday morning, spot gold was trading at $3,352.69 per ounce, marking a 1.9% increase and reaching its highest level since May 23. U.S. gold futures mirrored this trend, rising to $3,377.50. In India, the price for 24-karat gold rose by ₹330, bringing it to ₹96,580 per 10 grams, reflecting the global upward momentum in gold prices .

Drivers Behind the Surge

Geopolitical Strains

The ongoing conflict between Russia and Ukraine has intensified, with both nations ramping up military actions ahead of scheduled peace talks. Ukraine's drone strikes across Russian territories and Russia's retaliatory assaults have exacerbated global tensions, prompting investors to seek refuge in gold .

Trade War Escalation

U.S. President Donald Trump's recent announcement to double tariffs on imported steel and aluminum to 50% has reignited fears of a trade war. China responded by accusing the U.S. of violating their trade truce, further straining relations between the two economic giants . These developments have led to increased market volatility, making gold an attractive investment.

Currency Fluctuations

The U.S. dollar experienced a slight decline, making gold more affordable for investors holding other currencies. A weaker dollar often boosts gold demand, as it lowers the cost of purchasing the metal in other currencies .

Analyst Insights

Giovanni Staunovo, an analyst at UBS, noted, "The escalation in geopolitical tensions and trade disputes is driving investors toward safe-haven assets like gold." Similarly, Tim Waterer of KCM Trade highlighted that "the combination of geopolitical risks and trade uncertainties is creating a perfect storm for gold prices to rise."

Investor Outlook

The current market conditions suggest that gold may continue its upward trajectory in the short term. Investors are advised to monitor geopolitical developments and trade negotiations closely, as these factors will significantly influence gold prices. Additionally, upcoming speeches from U.S. Federal Reserve officials, including Chair Jerome Powell, may provide further insights into monetary policy directions that could impact gold's appeal.

Conclusion

The nearly 2% rise in gold prices underscores the metal's role as a safe-haven asset during times of geopolitical and economic uncertainty. As global tensions persist and trade disputes escalate, gold is likely to remain a favored investment for those seeking stability in volatile markets.