Source: Sharecast
Gold futures on Comex were up 1.3% at $3,156.10 an ounce in afternoon trade, ahead of the 1 April deadline at which Donald Trump will impose a barrage of trade tariffs on a litany of foreign imports.
There are concerns that a trade war could impact global economic growth and stoke inflation, as businesses are forced to hike prices in response to additional duties on goods imported into the US.
According to Morgan Stanley analysts on Monday, gold could hit $3,400 an ounce this year. Last week, Goldman Sachs raised its year-end forecast to $3,300 an ounce.
However, following a 20% jump in prices since the start of the year, analyst David Morrison from Trade Nation said: "Given that, and given that gold hasn’t had a significant pullback in over four weeks, it feels as if the air is pretty thin up here above $3,100."
Specific concerns about the US economy were also clouding the macro outlook following Friday's weak consumer sentiment figures from the University of Michigan, with confidence declining for the third month straight.
Goldman Sachs on Monday raised its forecast for the probability of a US recession from 20% to 35%, saying that the Trump administration is sacrificing weaker economic growth as it continues to step up protectionist trade measures.
Analysts at SP Angel said a "generally gloomy atmosphere in the market" was contributing to the latest move higher in gold. Meanwhile, a weakening of sentiment in the AI sector may also be fuelling increasing flows into bullion, they said in a email on Monday.
"Gold ETF levels remain well below 2020 and 2022 levels, suggesting there is ample room for gold to run higher, assuming China’s central bank doesn’t start selling its holdings into the market strength," SP Angel said.