Gold and silver surged to fresh record highs on Monday as President Donald Trump’s escalating push to take over Greenland stoked fears of a deepening trade war between the United States and Europe, driving investors toward traditional safe-haven assets.
Spot gold jumped as much as 2.1% to trade near $4,700 an ounce, while silver rallied up to 4.4%, reflecting a sharp rise in risk aversion across global markets. The gains came as the US dollar weakened and investors reassessed the geopolitical and inflationary fallout from Washington’s growing confrontation with key European allies.
The rally follows Trump’s announcement that the United States will impose tariffs on eight European countries — including France, Germany and the United Kingdom — that have opposed his plan to acquire Greenland. Under the proposal, 10% levies will take effect on February 1 and rise to 25% by June, a move that has alarmed markets and policymakers alike.
Concerns over the potential economic damage from Trump’s bid to annex Greenland have added new momentum to an already historic rally in precious metals. Gold prices are now up roughly 70% over the past 12 months, marking one of the strongest annual advances in decades, as investors pile into assets seen as protection against political instability, inflation and currency depreciation.
Market participants have increasingly turned to gold and silver in recent weeks amid heightened geopolitical tensions and renewed attacks by the Trump administration on the independence of the Federal Reserve. Those concerns have raised questions about the central bank’s ability to rein in inflation without political interference, further boosting demand for hard assets.
European leaders are now weighing their response. According to people familiar with the discussions, the European Union is considering retaliatory tariffs on up to €93 billion ($108 billion) of US goods. German Finance Minister Lars Klingbeil struck a defiant tone on Monday, saying Europe must draw a clear line.
“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,” Klingbeil said in Berlin.
Analysts warn that an escalating tariff battle could have far-reaching consequences for global trade, inflation and growth. “The US’s tariff threats over Greenland are reminiscent of a mafia extortion racket,” said Peter Mallin-Jones, an analyst at Peel Hunt LLP. “The precious metal impact looks like a reaction to a move away from US dollar assets and the potential inflationary impact of a trade war between the US and EU, let alone a chilling effect on economic activity.”
Gold recorded its best annual performance since 1979 last year, supported by falling US interest rates, sustained central bank buying and growing geopolitical uncertainty linked to Washington’s foreign policy. Silver has outperformed even gold, with prices tripling over the past year as investors embraced the broader metals complex.
A significant driver of the rally has been strong buying from China, alongside renewed inflows into exchange-traded funds. Gold-backed ETFs saw holdings rise by more than 28 tons last week, the largest weekly increase since September, and have expanded in seven of the past eight weeks, underscoring the strength of investor demand.
Many analysts believe the rally still has room to run. Citigroup Inc. last week forecast that gold could reach $5,000 an ounce within three months, while silver may climb to $100 an ounce, citing strong investment flows, supply constraints and mounting geopolitical risks.
As of 12:42 p.m. in London, spot gold was up 1.7% at $4,671.97 an ounce after earlier touching a peak of $4,690.59. Silver gained 3.5% to $93.30, having earlier hit $94.12. Platinum and palladium also advanced, while the Bloomberg Dollar Spot Index slipped 0.2%.
Investors are now closely watching the US Supreme Court, which is due to hear arguments on Wednesday regarding Trump’s effort to fire Federal Reserve Governor Lisa Cook. The case is widely seen as pivotal for the future independence of the central bank — and could prove another critical catalyst for precious metals markets.
