SINGAPORE – Gold is finally seeing some bullish momentum as trade war ructions escalate. President Donald Trump’s tariff salvo trained at Mexico boosted the metal, which has been weighed down by the strong dollar.

Bullion prices advanced to a two-week high to head for a narrow monthly gain after Trump said that he would impose a 5% tariff on Mexican goods, effective June 10, until that country stops immigrants from entering the US illegally.

“The US is demonstrating that they can weaponize trade on a whim,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “From China to Mexico, it sends a message that no country is safe. Gold is picking that up.”

Gold has been struggling to make headway this year even as global tensions picked up, losing out as investors preferred the haven of US Treasuries, with yields on 10-year notes at 20-month lows, and the greenback. Global equities are heading for the worst month since December and there are growing signals that an economic slowdown is imminent, with the outlook for China’s manufacturing sector deteriorating more than expected in May, according to data on Friday. The move against Mexico adds another layer of risk.

“The Trump-Mexico news has, and will continue to, really rattle markets today” said Jeffrey Halley, senior market analyst at Oanda. Still, “I would need to see a move through $1 310 over the next week before reviewing my thoughts on gold’s underwhelming price action this month.”

Spot gold climbed as much as 0.4% to $1,294.32 an ounce, the highest level since May 16, and traded at $1 294.11 at 7:49 a.m. in London. The precious metal is up 0.8% in May, poised to snap three months of losses.

The US standoff with China looks set to worsen. Fresh tariffs by China on US goods are set to kick in as soon as June 1, and Beijing has readied a plan to restrict exports of rare earths to the US if needed. Prospects of a trade deal with Washington are now less likely after the news on Mexico, analysts said.

Another supportive factor for gold is the potential for an US rate cut. The Federal Reserve is prepared to ease if it sees mounting risks to the expansion, vice chairman Richard Clarida said Thursday while stressing the economy is in a “very good place” with unemployment low and inflation muted.

Other precious metals were all down in May. Silver headed for a fourth straight monthly drop, platinum fell 11%, the biggest monthly loss in more than three years, and palladium declined 1.5%.