Gold rose more than 2% on Monday to its highest in more than three weeks, as a weaker dollar and a combination of geopolitical risks and economic uncertainty fueled investor demand for safe-haven assets.

Spot gold was up 2.7% at $3,377.29 an ounce, as of 10:19 a.m. ET (1419 GMT), after hitting its highest since May 8 earlier in the session.

U.S. gold futures were up 2.6% at $3,402.70. The dollar (.DXY), fell 0.7% against a basket of other currencies, making bullion cheaper for holders of other currencies.

Stocks also fell as U.S.-China trade tensions escalated and investors braced for a busy week of economic and political events, including a critical U.S. jobs report and a long-expected interest rate cut by the European Central Bank.

"Friday's latest tariff threats, including plans to double steel and aluminum tariffs to 50% along with last weekend's Ukrainian incursion into Russia, have heightened geopolitical risk appetite and fueled risk-off sentiment," said Peter Grant, vice president and senior metals strategist at Zanier Metals.

Tensions between Washington and Beijing have resurfaced after U.S. President Donald Trump on Friday accused China of violating an agreement with the U.S. to mutually lift tariffs and trade restrictions on critical minerals.

U.S. Treasury Secretary Scott Bessent on Sunday hinted at the possibility of an imminent phone call between Trump and Chinese President Xi Jinping to resolve trade issues.

Investors are also looking to comments from Fed Chair Jerome Powell and other policymakers this week for clues on the direction of U.S. interest rates.

Gold tends to benefit in low-interest-rate environments and during periods of geopolitical stress.

Between fears of a renewed trade war, fiscal uncertainty and concerns about the U.S. debt ceiling, the backdrop is ripe for volatility, Fawad Razaqzada, market analyst at City Index and FOREX.com, said in a note.

For the gold outlook, this backdrop of risk aversion and fiscal uncertainty is very favorable."

Spot silver rose 4.1% to $34.31 an ounce, platinum rose 0.3% to $1,059.55, and palladium rose 1.2% to $982.40. (alg)

Source: Reuters