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Gold rates surged more than 2 per cent in Monday's session, supported by the dollar's weakness and healthy spot demand even as investors and traders kept a close eye on news flows surrounding the US-China trade tension. MCX Gold June 5 contracts traded 2.14 per cent higher at ₹94,615 per 10 grams around 4:50 PM.

International gold prices also rose by over a per cent with investors' focus on the US-China trade talks and the US Federal Reserve's policy outcome on Wednesday.

The dollar index declined about half a per cent as concerns over a looming recession in the US pressured the domestic currency.

The US GDP contracted at a 0.3 per cent annualised rate in the first quarter of 2025. US manufacturing contracted for a second straight month in April. The ISM's manufacturing PMI dropped to a five-month low of 48.7 in April from 49.0 in March.

A weaker dollar makes gold cheaper in other currencies, which enhances its demand and supports prices.

While trade negotiations between the world’s two largest economies remain a key driver for the yellow metal, the focus has shifted to the US Federal Reserve’s economic projections and signals about its interest rate trajectory. The Fed is widely expected to keep rates unchanged on Wednesday.

Reuters reported US President Donald Trump on Sunday saying that the "US was meeting with many countries, including China, on trade deals, and his main priority with China was to secure a fair trade deal."

(This is a developing story. Please check back for fresh updates.)

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