Gold prices rose on Monday, as safe-haven demand surged after the United States and China launched fresh tit-for-tat tariffs on each others goods, escalating a prolonged trade war and adding to fears of a global economic slowdown.

Washington began imposing 15% tariffs on a variety of Chinese goods on Sunday, including footwear, smart watches and flat-panel televisions, as Beijing began imposing new duties on U.S. crude.

Spot gold was 0.4% higher at $1,525.18 per ounce at 0541 GMT, having fallen to a one-week low at $1,517.11 in the previous session.

U.S. gold futures were up 0.3% at $1,533.80 an ounce.

“The reality of the trade war with the new tariffs being implemented over the weekend has kept a risk-off tone in  markets this morning," said ANZ analyst Daniel Hynes.

U.S. President Donald Trump said both the sides would still meet for talks later this month.

“There is still a very high level of scepticism. Traders want to see talks restart with both parties suggesting some positive outcomes before any optimism around the progress sets in," Hynes added.

Escalation in the trade war between the world's biggest economies and heightened fears over a global downturn contributed to a rise of more than $100 for gold in August.

A private business survey showed on Monday China's factory activity unexpectedly expanded in August as production edged up, but orders remained weak and business confidence faltered amid  Sino-U.S. trade woes.

Meanwhile, the dollar index against a basket of six major currencies was down 0.1%, while global stock prices fell.

Spot gold still targets $1,497 per ounce, according to Reuters technical analyst Wang Tao.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.23% to 878.31 tonnes on Friday.

Hedge funds and money managers increased their bullish stance in COMEX gold and upped net long positions in silver contracts in the week to Aug. 27, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Among other precious metals, silver inched 0.1% lower to $18.33 per ounce.

Spot platinum climbed 0.8% to $937.70 per ounce, while palladium was up 0.5% at $1,538.22.

Trading could be subdued as U.S. financial markets are closed on Monday for the Labour Day holiday.

Copyright Reuters, 2019