Gold prices jumped 1 per cent to their highest level in more than six years on Monday, as the escalating trade war between the US and China along with global growth worries drove investors towards safe-haven assets.

Spot gold was up 0.8 per cent at $1,451.37 per ounce as of 0405 GMT, after hitting its highest since May 2013 at $1,455.26. US gold futures rose 0.5 per cent to $1,464.50.

“Gold is certainly benefiting from the global concerns about the outlook for growth, and central banks are likely to maintain their accommodative stance, so safe-havens like gold are in demand,” said Michael McCarthy, chief market strategist, CMC Markets.

“Trade tensions between the US and China is an important factor, the potential for escalation is very high... we might not get what markets are fearing, but it is all adding to the real concerns about the outlook for growth assets.”

On Friday, China said it will fight back against US President Donald Trump's decision to impose an additional 10 per cent tariff on $300 billion worth of Chinese imports.

The tariffs may force the central bank to cut interest rates more than it had hoped was necessary to protect the US economy from trade-policy risks, experts said.

Meanwhile, recent economic readings from the US cemented expectations that the Federal Reserve will cut interest rates again in September after it delivered its first rate reduction in more than a decade last month.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion, and weigh on the dollar. Helping the bullion's appeal, the dollar index touched a one-week low, making gold cheaper for investors holding other currencies.

Adding to the global economic gloom, China's services sector expanded at the slowest pace in five months in July despite a sharp upturn of new export orders, a private survey showed on Monday.

“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.

Further helping gold's allure, Asian shares slid to 6-1/2-month lows on Monday. On the technical front, spot gold may climb into a range of $1,461-$1,474 per ounce, said Reuters technical analyst Wang Tao.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.36 per cent to 830.76 tonnes on Friday from Thursday.

Hedge funds and money managers raised their bullish stance in COMEX gold and silver contracts in the week to July 30, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Elsewhere, silver gained 1.5 per cent to $16.45 per ounce and platinum climbed 1.1 per cent to $851.98.

Palladium eased 0.1 per cent to $1,404.87 an ounce.

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