On Monday morning, gold prices in the international markets rose to their highest in over two-months on continued US-China trade tensions and Washington's threat of tariffs on Mexico that have spiked worries of a possible global recession. In times of economic uncertainties like these, investors flock towards the safe haven metal.
Spot gold was up by 0.5 percent at $1,312.37 an ounce, on touching its highest since 27 March at $1,312.60. US gold futures rose 0.5 percent to $1,317.50 per ounce.
Gold prices in India were also higher on Monday. The precious metal was priced at Rs 30,800 in Chennai, Rs 31,710 in Kolkata and Rs 31,450 in Mumbai as well as Delhi, per 10 grams of 22 carats.
Goldman Sachs Group Inc have warned of the negative impacts of trade tensions and has lowered its US second half growth forecast by about half a percentage point to 2 percent, while sharply raising its subjective probabilities for rate cuts by the Federal Reserve. It also expects the US to impose 10 percent tariffs on the remaining $300 billion worth of imports from China and on all Mexican goods too.
Another international investment bank, Morgan Stanley feels that investors have underestimated the full risk that the global economy is subject to from the trade war.
A recession could begin in as soon as nine months if President Donald Trump pushes to impose 25 percent tariffs on an additional $300 billion of Chinese exports and China retaliates with its own countermeasures, says Chetan Ahya, chief economist and global head of economics at Morgan Stanley.