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Gold extended gains to a two-week high on Tuesday, supported by post-holiday buying from China and uncertainty over US tariffs.

Spot gold advanced 1.6% to $3,388.81 an ounce by 10:45 a.m. ET, having approached the $3,400 level during earlier trading. Three-month US gold futures also rose by nearly 2.1% to $3,392.60 per ounce.

The rally coincides with the resumption of trading in top consumer China following its early May holiday. Data from the Shanghai Futures Exchange indicated that its trading volume has been hitting record volumes in recent weeks.

“The bull market is being driven by China’s latest gold investing surge, plus the ongoing bid from central banks wanting to cut their exposure to US assets, most especially the dollar,” Adrian Ash, BullionVault’s director of research, wrote in a note.

Meanwhile the US dollar, traditionally viewed as a safe haven like gold, continues to struggle as investors began to grow wary over potential trade deals.

“We think there is increased participation from speculators in China. In the West, we think that despite the fact that prices are overbought, gold is significantly under-owned. Both of these factors should underscore stronger gold prices,” TD Securities commodity strategist Daniel Ghali said.

Bullion has been on the rise since US President Donald Trump unleashed chaos onto the global market with his sweeping tariffs. So far this year, the precious metal has surged by more than 25%, including a record high of above $3,500 two weeks ago.

Many banks and analysts are predicting gold prices to go even higher. JPMorgan recently forecast gold to reach $4,000 by the second quarter of next year, after averaging $3,675 an ounce by the end of 2025. TD’s Ghali said prices could trade up to $4,000 as soon as this year.

Investors are now closely monitoring the Fed’s upcoming policy decision on Wednesday, as it may offer clues on the potential timing of interest rate cuts, which may further boost gold’s appeal.

(With files from Reuters)