Spot gold was up 2.5% at $3,372.13 an ounce, as of 02:17 p.m. ET (1817 GMT), after hitting its highest level since May 8 earlier in the session, Reuters reported.
The dollar fell 0.5% against a basket of peers, making bullion cheaper for holders of other currencies.
Also read: OECD lowers global outlook as Trump trade war hits US growth
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 U.S. 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 sharply rose 4.7% to $34.54 an ounce, marking its highest level since October 23, hitting an over seven-month peak earlier in the session.
Platinum was up 0.6% at $1,062.10 and palladium rose 1.8% to $988.19.
In Pakistan, the price of 24 karat per tola gold witnessed an increase of Rs.1,000 on Tuesday and was sold at Rs.354,100 against its sale at Rs. 353,100 on the previous trading day, All Pakistan Sarafa Gems and Jewelers Association reported.
The prices of 10 grams of 24 karat also increased by Rs.857 to Rs.303,583 from Rs. 302,726 whereas the price of 10 grams of 22 Karat went up by Rs.786 to Rs.278,294 from Rs.277,508.
The rates of per tola and ten gram silver went up by Rs130 and 112 to Rs.3,586 and Rs.3,074 respectively.
