Chinese yuan falls below 7 per dollar to 11-year low
London: Gold rose to a more than six-year high on Monday, gaining more than 1%, as an escalating trade conflict between the United States and China sent investors scurrying for the safety of bullion.
Spot gold was up 1.5% at $1,462.40 per ounce as of 1301 GMT, after hitting its highest level since May 2013 at $1,464.60. US gold futures rose 1.2% to $1,474.30.
"This (price action) is still about the escalation of trade tension between the US and China ... risk aversion is spreading in financial markets and that is something which definitely helps gold," Julius Baer analyst Carsten Menke said.
Fears of a slowdown in global economic growth and expectations of more rate cuts by the US Federal Reserve were also supporting bullion, he added.
Global stocks fell for a sixth day on Monday while US.
On Friday, China said it would fight against a decision by US President Donald Trump to slap an additional 10% tariff on $300 billion worth of Chinese imports.
The tariffs may force the US central bank to cut interest rates more than it had hoped was necessary to protect the economy from trade-policy risks.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion, and weigh on the dollar.
"The near-term outlook for gold looks positive. All this volatility, growth fears, persistent weakness in economic data will be good enough for a risk-off environment," said Benjamin Lu, an analyst at Phillip Futures.
The dollar slipped to a more than one-week low against key rivals, making bullion cheaper for investors holding other currencies, but rose against the Chinese yuan.
China let its yuan weaken below 7 per dollar on Monday, an 11-year low, while offshore yuan fell to its weakest since international trading of the Chinese currency began.
"This might encourage some more gold buying in China as a weaker yuan means a stronger dollar, and gold provides you exposure to the dollar, which makes gold attractive for the Chinese," Julius Baer's Menke said.
The Shanghai Gold Exchange said it would raise the margin requirement on its AU(T+N2) gold contract. The trading limit on the contract would also be raised.
In India, domestic prices soared to a record, dampening demand for the metal in the world's second-biggest gold consumer after China.
Meanwhile, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to 830.76 tonnes on Friday.
Elsewhere, silver rose 1.3% to $16.42 per ounce.
Platinum climbed 1.8% to $857.67, while palladium gained 2.6% to $1,442.67.