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Gold prices are on a record-breaking streak as the US dollar continues to weaken against most major currencies.
Spot gold hit another record high of US$3,440 an ounce in early trading, following US President Donald Trump's reposting of a comment over the long holiday weekend.
"The Golden Rule Of Negotiating And Success: He who has the gold makes the rules."
However, Westpac currency strategist Imre Speizer said there were other reasons why gold was finding favour with investors.
"A major theme that we're seeing unfold is the questioning of the US dollar's identity as the reserve currency of choice in the world. That questioning has caused it to underperform," Speizer said.
"There's clearly been large-scale selling of the US dollar and buying of other currencies, as well as buying of other instruments, like gold, which I think partially explains most sitting up near record highs. So essentially, there's a bit of a diversification away from the US dollar unfolding as we speak."
The New Zealand dollar also continued to rise against the US dollar, trading at about US$0.60, compared with less than US$0.55 earlier this month.
Foreign currency exchange market analyst Linh Tran at XS.com said the gold rally continued as defensive sentiment spread across global financial markets.
"The rally remains supported by three core drivers: growing expectations that the Federal Reserve will soon shift to monetary easing, escalating trade tensions between the US and China, and persistent geopolitical risks-especially as peace efforts between Russia and Ukraine remain stalled," he said.
He said the spotlight over the past week was on a hardline move by the Trump administration, terminating the "de minimis" rule, which was a trade provision that exempted imported goods valued under $800 from tariffs.
"For years, this loophole has been used by many Chinese companies to ship low-cost goods into the US market without facing high tariff rates. Closing this channel will significantly raise the cost of Chinese goods and clearly signals Washington's increasingly tough stance on bilateral trade."
In addition, he said tensions between the world's two largest economies intensified further with reports that China has cancelled a series of Boeing aircraft orders, citing a need to "reassess strategic priorities."
Speizer said the unease was seeing a shift in sentiment by global reserve managers regarding the US as a safe haven.
"Looking ahead, if this turmoil continues, not only will they question whether the US dollar is indeed safe, but they'll see alternatives like the Euro-denominated government bonds or government bonds from Germany as being a viable alternative to start parking some of that safe haven money into," Speizer said.
New York-based 50 Park Investments chief executive Adam Sarhan told Reuters the US dollar weakness reflected the market uncertainty.
"The fact that we're down so much today after a long weekend tells me, OK, investors went into the weekend, they looked at the situation, and they see more uncertainty, not less uncertainty," Sarhan said.
"We're seeing more weakness now in the dollar and gold is at all-time highs, so clearly investors are spooked and fear is taking over."
-RNZ/Reuters
