As the trade war between the world’s two largest economies heats up again, the probability of a US recession is now “the biggest concern,” says Standard Chartered Private Bank’s strategist Clive McDonnell.

The chance of such a recession in the next 12 months has risen from 25 percent to “as high as 40 percent,” according to McDonnell.The head of equity strategy at Standard Chartered said in an interview with CNBC that he was telling clients to consider putting their money in gold amid the escalating uncertainty.

“Gold was an asset class that for many, many years… we shunned,” he said. “But last month, we upped gold to a preferred status to reflect that… increased anxiety, increased uncertainty.”

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The strategist said: “I would not be surprised if — and I emphasize if — the US were to slide into recession that we would see... upwards of $2000 on the gold price.”

According to McDonnell, “In an environment where… all assets aside from US Treasuries… would be weakening… gold would be… an asset that could re-rate further.”

The price of gold skyrocketed to more than a six-year high as panicked investors seek a safe haven for their assets over fears that Washington was ready to escalate the raging US-China trade war.

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On Monday, US President Donald Trump said the countries will start trade talks shortly as Beijing had offered to get back to negotiating a deal. The announcement followed Trump’s warnings that he would raise existing duties on $250 billion of Chinese products to 30 percent from 25 percent on October 1. He also said additional tariffs on another $300 billion of Chinese goods, which come into effect on September 1, will now be 15 percent instead of 10 percent.

China earlier vowed to hike levies on $75 billion worth of US exports and to resume 25 percent tariffs on American automobiles.

“The compounding effect of… continuous ratcheting in terms of tariffs is definitely escalating the risk that the US just glides into recession,” said McDonnell. “I think that’s a real concern for markets now.”

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