Gold continued its remarkable rally on Monday as its price surged above $3,100 per ounce to a new record high, as worries about potential inflation due to U.S. tariffs set the safe-haven asset up for its strongest quarter since 1986.
Meanwhile, shares around the world slumped on Monday, with benchmarks in Tokyo and Taiwan falling more than 4%.
Bullion maintained its surge that has already seen the metal gain around 18% so far this year. It had risen more than 27% last year as several bullish factors, including a favorable monetary policy backdrop and robust central bank buying, combined to send investors toward the safe-haven asset.
Spot gold jumped 1.1% to $3,117.43 per ounce by 0935 GMT, having hit a record $3,128.06 earlier. U.S. gold futures were up 1.1% to $3,149.60.
Investors have pulled back and sought traditional safe havens like gold as worries build over a potentially toxic mix of worsening inflation and a slowing U.S. economy because households are afraid to spend due to the deepening trade war that has escalated under U.S. President Donald Trump.
On technical charts, gold's Relative Strength Index stands above 77, indicating the market is overbought, but analysts have said momentum has defied any standard logic of where prices are positioned.
"Gold's bull run is the reflection of the anxiety around tariffs. The fears that these tariffs are going to be growth constraining, potentially leading to lower economic outcomes," is supporting gold," Nitesh Shah, commodities strategist at WisdomTree, said.
Trump is expected to announce reciprocal tariffs on Wednesday, while automobile tariffs will take effect on Thursday. He has dubbed it "Liberation Day," when he will roll out duties tailored to each of the United States' trading partners.
A combination of other factors, including rate cuts bets, central bank purchases and demand for exchange-traded funds have all helped non-yielding bullion's record run.
"Gold prices could be trading around $3,500 about this time next year and that reflects sentiment towards the metal remaining strong, primarily with all the geopolitical risks still there," Shah said.
On Sunday, Trump said he was "pissed off" at Russian President Vladimir Putin and would impose secondary tariffs of 25%-50% on buyers of Russian oil if he feels Moscow is blocking his efforts to end the war in Ukraine.
On the physical front, gold demand in India remained sluggish last week because of record high prices and as jewellers were busy closing accounts for the financial year, while most other Asian hubs also saw waning buying interest.
Spot silver rose 0.2% to $34.17 an ounce, platinum was up 1% to $993.15 and palladium gained 0.5% to $976.75. All three metals headed for monthly gains.
Stock markets worldwide appeared shaky as the deadline approaches for more tariffs.
The future for the S&P 500 sank 1%, while that for the Dow Jones Industrial Average dropped 0.7%.
European markets opened lower. Britain's FTSE 100 slid 1% to 8,576.54, and France's CAC 40 declined 1.1% to 7,829.09.
Germany's DAX fell 1.1% to 22,222.99.
Thailand's SET lost 1.3% after a powerful earthquake centered in Myanmar rattled the region, causing widespread destruction in the country, also known as Burma, and less damage in places like Bangkok.
Shares in Italian Thai Development, developer of a partially built 30-story high-rise office building under construction that collapsed, tumbled 27%. Thai officials said they are investigating the cause of the disaster, which left dozens of construction workers missing.
Many of the countries that run trade surpluses with the U.S. and depend heavily on export manufacturing are in Asia, Stephen Innes of SPI Asset Management said in a commentary.
"Asia is ground zero. Of the 21 countries under USTR (U.S. Trade Representative) scrutiny, nine are in Asia," he noted.
Tokyo's benchmark fell 4.1% to 35,617.56, while the Hang Seng in Hong Kong lost 1.3% to 23,119.58.
The Shanghai Composite index declined 0.5% to 3,335.75.
In South Korea, the Kospi fell 3% to 2,481.12, while Australia's S&P/ASX 200 sank 1.7%, closing at 7,843.40.
Taiwan's Taiex lost 4.2%.
On Friday, the S&P 500 dropped 2% to 5,580.94, for one of its worst days in the last two years. It was its fifth losing week in the last six.
The Dow Jones Industrial Average sank 715 points, or 1.7%, to 41,583.90, and the Nasdaq composite fell 2.7% to 17,322.99.
Lululemon Athletica led the market lower with a drop of 14.2%, even though the seller of athletic apparel reported a stronger profit for the latest quarter than analysts expected.
Oxford Industries, the company behind the Tommy Bahama and Lilly Pulitzer brands, likewise reported stronger results for the latest quarter than expected but still saw its stock fall 5.7%.
One of the main worries hitting Wall Street is that Trump's escalating tariffs may cause U.S. households and businesses to freeze their spending. Even if the tariffs end up being less painful than feared, all the uncertainty may filter into changed behaviors that hurt the economy.
A report Friday showed all types of U.S. consumers are growing more pessimistic about their future finances. Two out of three expect unemployment to worsen in the year ahead, according to a survey by the University of Michigan. That’s the highest reading since 2009, and it raises worries about a job market that’s been a linchpin keeping the U.S. economy solid.
A separate report also raised concerns after it showed a widely followed, underlying measure of inflation was a touch worse last month than economists expected.
The U.S. Federal Reserve (Fed) could return to cutting interest rates, like it was doing late last year, in order to give the economy and financial markets a boost. But such cuts would also push upward on inflation, which has been sticking above the Fed's 2% target.
The economy and job market have been holding up so far, but if they were to weaken while inflation stays high, it would produce a worst-case scenario called "stagflation." Policymakers in Washington have few good tools to fix it.
In other dealings early Monday, U.S. benchmark crude oil added 44 cents to $69.80 per barrel. Brent crude oil gained 46 cents to $73.22 per barrel.
The U.S. dollar fell to 149.13 Japanese yen from 149.84 yen. The euro was unchanged at $1.0830.
