(Reuters) – Gold soared over 2% to its highest ever on Monday as heightened U.S.-China tensions hammered the dollar and sped up a flight to safety among investors concerned that the spat could amplify the economic hit from the coronavirus pandemic.

Spot gold hit a record high of $1,943.93 per ounce, and by 0940 GMT was up 2% to $1,939.29. U.S. gold futures gained 2% to $1,936.30 per ounce.

Silver too joined the rally, jumping more than 6% to $24.36, its highest since September 2013.

Bullion is surging on a broadly weaker dollar, U.S.-China tensions and negative real yields, FXTM analyst Lukman Otunuga said.

“Buying sentiment towards the precious metal is through the roof, with further gains expected in the medium to longer term,” he added.

In the latest escalation of Sino-U.S. tensions, China took over the premises of the U.S. consulate in the southwestern city of Chengdu on Monday in retaliation for Beijing’s ouster last week from its consulate in Houston, Texas.

This sent the dollar index to its lowest since September 2018.

“Safe-haven demand (for gold) has been rising while there is none for USD anymore,” said ANZ commodity strategist Soni Kumari.

Investors are now awaiting the U.S. Federal Reserve’s meeting starting Tuesday, where it could flag another accommodative policy shift.

“You’d need a pretty upbeat and unexpectedly positive assessment from the Federal Open Market Committee to really dampen this rally,” said Julius Baer analyst Carsten Menke.

“Even if you had a surprise from the FOMC which weighed on gold, this is an opportunity to buy the dip.”

Non-yielding gold is considered a hedge against inflation and currency debasement, with analysts also pointing to massive inflows into gold-backed exchange traded funds as a driver behind its 28% rally in 2020.

Meanwhile, COVID-19 cases surged to over 16.13 million globally, driving expectations of more stimulus to stem the economic blow.

Platinum rose 2.3% to $934.83 and palladium was up 2.4% at $2,272.25.