Trade tensions and weakening dollar drive gold prices up to record highs

Gold surged 1.7% on Monday, hitting an all-time high of $3,385 per ounce. The hike was fueled by the escalating trade conflict between the US and China. 

Meanwhile, the dollar index fell to a three-year low, making the bullion even more attractive to investors holding other currencies. 

IG market strategist Yeap Jun Rong said that markets are factoring in increased geopolitical risks stemming from tariff disputes and fears over stagflation.

The situation has been exacerbated by the actions of US President Donald Trump, who imposed tariffs on numerous countries on April 2. Although some duties have been temporarily suspended for certain partners, tensions with China continue to escalate. This week, Beijing warned other nations against entering agreements with the United States that could undermine China's interests in the long run.

In addition, pressure is mounting on the Federal Reserve, with the Trump administration considering firing Fed Chair Jerome Powell after criticizing him in a series of public statements.

These developments have heightened interest in gold as a safe-haven asset, Reuters reports.