June 2 (Reuters) - Gold rose more than 2% on Monday to its highest in over a week, as a weakening dollar and a combination of geopolitical risks and economic uncertainty fuelled investor demand for safe-haven assets.
Spot gold was up 2.1% at $3,359.34 an ounce, as of 9:39 A.M. ET (1338 GMT), after hitting its highest level since May 23, earlier in the session.
U.S. gold futures rose 2.1% to $3,383.60.
The dollar (.DOXY), fell 0.4% against a basket of peers, making bullion cheaper for holders of other currencies.
Stocks also fell as U.S.-China trade tensions bubbled and investors braced for a packed week of economic and political cross-currents, including a critical U.S. jobs report and a widely expected rate cut by the European Central Bank.
"The latest tariff threats on Friday, including plans to double steel and aluminium tariffs to 50% along with Ukraine's weekend attacks deep into Russia, have heightened geopolitical risks and are fuelling risk-off sentiment," said Peter Grant, vice president and senior metals strategist at Zanier Metals.
Tensions between Washington and Beijing returned to the fore after U.S. President Donald Trump on Friday accused China of violating an agreement with the U.S. to mutually roll back tariffs and trade restrictions for critical minerals.
U.S. Treasury Secretary Scott Bessent on Sunday signalled a possible call soon between Trump and China's President Xi Jinping to iron out trade issues.
Investors are also closely watching for comments from Fed Chair Jerome Powell and other policymakers this week for clues on the U.S. rate path.
Gold tends to benefit in low-rate environments and during bouts of geopolitical stress.
Between fresh trade war fears, fiscal uncertainty and debt ceiling concerns, the backdrop is ripe for volatility, Fawad Razaqzada, market analyst at City Index and FOREX.com, said in a note.
"For the gold forecast, this backdrop of risk aversion and fiscal uncertainty couldn't be more favourable."
Spot silver rose 3.2% to $34.00 an ounce, platinum was down 0.2% at $1,054.25 and palladium rose 1.8% to $987.85.
Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Susan Fenton
