As of Tuesday, spot gold surged past the $4,700 mark to hit a new record of $4,765.93 an ounce, with futures for February delivery settling close behind at $4,765.80. Silver followed suit, reaching an all-time peak of $95.87 an ounce before a slight pullback. This surge reflects continued investor anxiety over a deepening diplomatic rift between the U.S. and Europe, broader economic vulnerabilities, and expectations of further monetary easing.
The latest wave of market volatility began over the weekend when Trump announced a fresh round of 10% tariffs on goods imported from eight European nations: Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the UK, which have staunchly opposed efforts by the U.S. to take control of Greenland. Trump hinted that these tariffs could rise to 25% by June if a deal on Greenland were not finalized.
In response, the European Union is reportedly preparing a retaliatory tariff package worth €93 billion, with leaders from the affected countries scheduled to convene an emergency summit on Thursday. French President Emmanuel Macron has strongly opposed the sale, even sending a pointed message to Trump questioning his intentions regarding Greenland. Meanwhile, Denmark significantly increased its military presence on the island, further escalating tensions.
The market reaction has been swift and unequivocal. Investors nudged by the specter of a trade war among NATO allies have poured capital into precious metals. Gold, often viewed as a bulwark during times of instability, has become even more attractive amid concerns about the erosion of confidence in U.S. financial leadership and assets. Susannah Streeter, Chief Investment Strategist at Wealth Club, noted that gold’s “glittering run” is being driven by the interplay of geopolitical anxieties and economic policy uncertainty. Silver, likewise, has benefited from the risk-off sentiment, its rally amplified by export restrictions announced by China and surging industrial demand. Prices for the metal have climbed roughly 147% in 2025, with an additional 32% increase documented since the start of 2026.
The rally in metals has outpaced broader market performance. On Monday, London’s FTSE 100 and FTSE 250 closed down 0.4% and 0.9%, respectively, with sectors like finance and manufacturing recording losses. In continental Europe, major indices such as Germany’s DAX and France’s CAC 40 declined by 1.3% and 1.8%, respectively, amid weakness in automotive and luxury goods manufacturers. On the flip side, gold mining stocks, including Fresnillo and Endeavour, posted notable gains, and defence firms like Rheinmetall (Germany) and Thales (France) saw their shares rise, reflecting investor anticipation of increased military expenditure amid growing tensions.
Expectations of U.S. Federal Reserve interest rate cuts also underpin the rally in gold and silver. A weakening U.S. dollar on track for its largest daily drop in over a month has made dollar-denominated precious metals more affordable to international buyers, further increasing demand.
Markets are currently pricing in at least two 25-basis-point rate cuts beginning mid-2026, driven by subdued inflationary data and political pressure on the Federal Reserve. Speculation intensified after U.S. Treasury Secretary Scott Bessent hinted that Trump may appoint a new Fed Chair as early as next week, raising concerns about the central bank’s independence.
The International Monetary Fund (IMF) warned in its latest World Economic Outlook that trade tensions represent one of the biggest threats to global economic growth. Though the report was prepared before the Greenland controversy erupted, it underscored vulnerabilities in a worldwide system increasingly shaped by political prerogatives over economic rationality.
Analyst Ole Hansen of Saxo Bank summarized the situation succinctly: “The Greenland episode has poured fresh fuel on a rally that has been building for months,” referencing a yearlong trend propelled by conflicts in Iran and Venezuela, alongside fiscal stresses in countries like Japan. Meanwhile, a Bank of America survey revealed that a majority of fund managers now consider gold the “most crowded trade,” with 45% viewing the metal as overvalued, at a record-high level of caution. Despite these concerns, many investment strategists continue to see further upside potential, citing $4,800 and even $5,000 per ounce as possible near-term targets.
As Trump prepares to attend the World Economic Forum in Davos, where he is expected to engage with European counterparts and corporate leaders, markets will be closely watching for policy updates and comments that could either soothe or escalate tensions. The U.S. Supreme Court could also deliver a ruling as early as this week on whether Trump’s use of the International Emergency Economic Powers Act to impose country-specific tariffs violates constitutional limits. This decision could dramatically impact the trajectory of trade relations and investor sentiment.
In such a climate, with the dollar under pressure, geopolitical divisions deepening, and central banks maintaining dovish stances, the resurgence of gold and silver has become emblematic of a broader shift among global investors: a flight to safety triggered not by recession, but by instability and uncertainty at the highest levels of government. As Peter Kinsella of Union Bancaire Privée aptly put it, “We have entered an era of resource nationalism between the major powers. The best way to play it is through precious metals exposure.” For now, that sentiment continues to shine brightly as investors reshape portfolios around a rapidly changing world order.