Gold and silver surged to fresh record highs as President Donald Trump’s intensifying push to take control of Greenland rattled markets and revived fears of a damaging trade war between the United States and Europe.
Spot gold climbed as much as 2.1 percent to near $4,700 an ounce. Silver jumped as much as 4.4 percent. The rally came as Trump’s latest tariff threats weighed on the US dollar and prompted investors to seek traditional safe-haven assets.
The US president has announced plans to impose tariffs on eight European countries that oppose Washington’s bid to acquire Greenland. The list includes France, Germany, and the United Kingdom. The move has raised concerns that a political dispute could spill into a broader economic confrontation between major trading partners.
The United States plans to impose a 10 percent levy starting February 1. That tariff will rise to 25 percent in June. European leaders are now discussing possible retaliation, including tariffs on €93 billion, or $108 billion, of US goods, according to people familiar with the talks, as reported by Bloomberg.
“We are constantly experiencing new provocations, we are constantly experiencing new antagonism, which President Trump is seeking, and here we Europeans must make it clear that the limit has been reached,” German Finance Minister Lars Klingbeil said on Monday in Berlin.
Markets have responded swiftly. Investors have poured money into precious metals, extending a rally that has already reshaped commodity markets over the past year. Gold prices are now up about 70 percent over the last 12 months. Silver’s rise has been even more dramatic, with prices roughly tripling over the same period.
Analysts say the Greenland dispute has added new momentum to a rally already fueled by geopolitics, trade risks, and concerns over US monetary policy. The Trump administration has recently renewed attacks on the Federal Reserve, raising fears about political pressure on the central bank and its ability to control inflation.
“The precious metal impact looks a reaction to a move away from US dollar assets and the potential inflationary impact of a trade war between the US and EU,” said Peter Mallin-Jones, an analyst at Peel Hunt LLP, according to Bloomberg. He added that the situation risks creating a chilling effect on economic activity.
Gold’s performance has been historic. The metal recorded its best annual gain since 1979 last year. Falling US interest rates, sustained central bank buying, and rising geopolitical tensions have all supported demand, according to Bloomberg data.
Silver has benefited from the same forces, along with its role as both a monetary and industrial metal. A broader rotation into commodities, led in part by investors in China, has further boosted prices. Holdings in gold exchange-traded funds increased by more than 28 tons last week, the largest weekly inflow since September, Bloomberg reported. ETF holdings have risen in seven of the last eight weeks.
Wall Street is increasingly bullish. Citigroup Inc. said last week that gold could reach $5,000 an ounce within three months. The bank also forecast silver climbing to $100 an ounce.
By midday in London, spot gold was up 1.7 percent at $4,671.97 an ounce, after earlier touching $4,690.59. Silver rose 3.5 percent to $93.30, after hitting a session high above $94. Platinum and palladium also gained. The Bloomberg Dollar Spot Index fell 0.2 percent.
Investors are now watching the U.S. Supreme Court closely. The court is set to hear arguments on Wednesday over Trump’s effort to fire Federal Reserve Governor Lisa Cook. The outcome could prove pivotal for perceptions of the Fed’s independence.
For markets, the message is clear. Political risk is once again shaping asset prices. And in times of uncertainty, investors are returning to gold and silver.
