(Reuters) – Gold prices rose on Monday to their highest in more than two months as heightened Sino-U.S. trade tensions and Washington’s threat of tariffs on Mexico stoked worries of a global recession and drove investors to seek refuge in safe-haven bullion.

Spot gold was up 0.5% at $1,312.37 per ounce at 0308 GMT, after touching its highest since March 27 at $1,312.60.

U.S. gold futures rose 0.5% to $1,317.50 an ounce.

“We are seeing a lot of traditional safe-haven hedging … coming back to the fray,” said Stephen Innes, managing partner, SPI Asset Management.

“(Equity) markets seemed to be a little bit complacent. What caught them off-guard was Trump doubled down, signalling that (dealings between countries) on the trade war front is going to be quite aggressive.”

U.S. stock futures, Asian share markets and oil prices slipped to multi-month lows on Monday amid the mounting trade worries.

Tensions between the United States and China escalated during the weekend as the two countries clashed over trade, technology and security.

“(Gold) markets are underpositioned and that’s why we are seeing investors aggressively chasing prices. There are bets getting placed on a more aggressive rate cut, another reason why we are seeing prices moving higher,” Innes said.

In a sign that Sino-U.S. frictions are putting a big strain on the global economy, South Korea’s exports fell 9.4 percent in May, worse than a median forecast for a 5.6 percent decline, official data showed on Saturday.

The gloomy outlook has prompted traders to increase bets that the U.S. Federal Reserve will cut interest rates sooner rather than later.

“Gold finally behaved like a safe haven last week, breaking out higher after the trade war escalation led to a code red for global growth,” Edward Moya, senior market analyst at OANDA, said in a note.

Gold prices surpassed the key $1,300 level for the first time since April on Friday after being stuck in a nearly $20 range for weeks.

Hedge funds and money managers increased their net long positions in COMEX gold in the week to May 28, data showed.

Indicating improved investor interest in gold, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.32 percent to 743.21 tonnes on Friday from Thursday.

In other precious metals, silver edged up 0.6% to $14.65 per ounce; platinum rose 1% to $799.73 per ounce, after having fallen to its lowest level since Feb. 15 at $784.42, last week; and palladium rose 1.7% to $1,347.10 per ounce.