Gold and crude oil extended their gains due to a weakening dollar and geopolitical uncertainty. Gold prices surged 2.8% on Monday, approaching $3390 per ounce. Brent crude oil prices rose 2.9% on Monday and are currently nearing $65 per barrel, while WTI crude oil prices are around $63 per barrel.

Safe-Haven Sentiment Supports Gold's Rise

Gold prices edged higher after posting their largest single-day gain in four weeks. Gold surged 2.8% on Monday, nearing $3390 per ounce. China accused the US of violating their recently reached trade agreement and vowed to take measures to defend its interests. Meanwhile, the European Union reiterated its warning that it would take countermeasures if US President Donald Trump delivered on his tariff threats.

The latest trade negotiation developments dampened optimism about the US reaching agreements with its two major trading partners. The dollar fell to its lowest level since 2023, reflecting growing concerns about Trump's policies and their economic impact. Wall Street banks reinforced their expectations for further dollar depreciation.

These factors underscore gold's safe-haven appeal, which had somewhat diminished since gold prices hit record highs above $3500 per ounce in April. Nevertheless, gold is still up over a quarter year-to-date, and Goldman Sachs Group said last week that gold would continue to serve as an inflation hedge in long-term portfolios, similar to oil.

As of press time, spot gold was up 0.2% at $3389.61 per ounce. The Bloomberg Dollar Spot Index stabilized after falling 0.6% on Monday. Silver prices were flat, after having touched their highest point since last October. Platinum prices edged higher, and palladium prices were little changed.

Looking ahead, a series of US labor market indicators will be released this week, including the May employment report, which will provide insight into the Federal Reserve's monetary policy direction. Lower interest rates are generally favorable for non-yielding gold.

Geopolitical Turmoil Boosts Crude Oil

Notably, oil prices rose for a second consecutive day, as a weaker dollar boosted the appeal of dollar-denominated commodities, while geopolitical turmoil limited the possibility of increased supply from Russia and Iran.

Brent crude oil prices rose 2.9% on Monday and are currently nearing $65 per barrel, while WTI crude oil prices are around $63 per barrel.

Oil prices extended their gains, influenced by a weakening dollar and geopolitical uncertainty.

Geopolitically, Russia and Ukraine concluded their second round of talks in Istanbul, but both sides failed to get closer to ending the war. Meanwhile, Trump stated that the US would not allow uranium enrichment activities as part of a deal with Iran, while the Iranian side sought to ensure any agreement would include the lifting of sanctions.

Furthermore, OPEC+ increased production as expected, easing market concerns about larger output increases. As OPEC+ abandoned its previous strategy of defending high oil prices through production cuts, and with market fears that a trade war would suppress demand, oil prices are still down nearly 13% year-to-date.

Meanwhile, a large wildfire near the eastern border of Alberta, Canada, threatened oil sands operations, disrupting nearly 350,000 barrels/day of crude oil production in the province, accounting for approximately 7% of the country's output.