Mubasher: Gold prices rose on Monday beyond their highest level in more than two months, as persisting trade tensions between the US and China and Washington’s threat to slap Mexican imports with tariffs fanned fears of a global economic recession, prompting investors to seek the safe-haven metal, Reuters reported.

By 10:38 am GMT, spot gold climbed by 0.86% to $1,316.86 per ounce, beyond $1,314.33 per ounce, the highest since 27 March, while US gold futures rose by 0.84% to $1,322.10 per ounce.

Equities appeared to be a little “complacent,” according to SPI Asset Management managing partner Stephen Innes.

“What caught them off-guard was Trump doubled down, signalling that [dealings between countries] on the trade war front is going to be quite aggressive,” Innes was quoted by Reuters.

US stock futures, Asian equities and oil markets dipped to their lowest levels in many months, amid the mounting trade worries.

“[Gold] markets are underpositioned and that’s why we are seeing investors aggressively chasing prices,” Innes said.

Reflecting the big strain that the US-Sino trade conflict put on global economic growth, South Korea’s exports dropped by 9.4% in May, as shown by official data released in the weekend.

“Gold finally behaved like a safe haven last week, breaking out higher after the trade war escalation led to a code red for global growth,” a note by OANDA senior market analyst Edward Moya was quoted by the news agency.

Moreover, the cloudy outlook led traders to raise their wagers that the US Federal Reserve will cut interest rates sooner than expected.

Lower interest rates would mean support for the yellow metal, as the opportunity cost of holding non-yielding bullion becomes lower.