Gold rallied as much as 3% global markets gyrated and the dollar weakened after US President Donald Trump imposed sweeping new import tariffs and China hit back with levies of its own.

A vicious selloff of US government bonds — typically a safe haven in times of turmoil — underscored a jittery day for investors as Trump's historic trade measures came into effect. Bullion extended recent declines before swinging sharply higher.

"Gold's rebound reflects growing investor anxiety over tariff threats and the potential reshaping of global trade norms," said Christopher Wong, a foreign currency strategist at Oversea-Chinese Banking Corp. Bullion remains a good hedge against a more disorderly global economy, he said. 

Trump placed higher duties on roughly 60 trading partners, with China facing a punitive tariff of 104% on its goods. In response, China said it will impose an 84% tariff on US goods from Thursday.

Tensions have spiraled between Washington and Beijing since Trump returned to the White House in January.

The US president has yet to speak with his Chinese counterpart, President Xi Jinping, more than two months after his inauguration. 

Gold has enjoyed a powerful run — including a record high last week — but had been caught up the global selloff over the past week as the scale of Trump's trade shake-up was revealed. Even though bullion is a traditional haven, extreme market disruptions can prompt investors to sell the asset to cover losses elsewhere. 

The precious metal is still seen having more upside, after a gain of nearly 30% over the past year on central bank buying and growing geopolitical tensions. There's also speculation that heightened volatility may prompt the Federal Reserve to speed up rate cuts to prevent a recession. Lower rates typically benefit gold, which doesn't pay interest. 

Read More: China Drives Record Gold ETF Inflows as Trade War Deepens

Gold for immediate delivery was up 2.8% at $3,066.69 an ounce at 1:17 p.m. in London, after earlier hitting a high of $3,073.04. The Bloomberg Dollar Spot Index fell 0.5%. Silver, palladium and platinum also rose. 

Source: Bloomberg