Gold Skyrockets as Trump’s Greenland Play Triggers Europe Trade War

TLDR

• Gold climbed to $4,670.47 per ounce and silver jumped to $94.12 on Monday as Trump tariff threats sparked investor concern
• President Trump announced 10% tariffs on eight European countries beginning February 1, escalating to 25% in June over Greenland dispute
• European officials planning emergency sessions to discuss retaliatory measures including tariffs on $108 billion of US exports
• Investment analysts predict gold could reach $5,000 per ounce in next three months as safe-haven buying accelerates
• Dollar index fell 0.2% while gold ETF holdings rose 28 tons last week, strongest weekly gain in four months

Precious metal markets experienced dramatic gains on Monday as geopolitical tensions between the United States and Europe intensified. Gold and silver both reached record territory following new policy announcements from Washington.

Gold prices rose 1.6% to $4,670.47 per ounce during Monday’s Asian session. Earlier in the day, the metal peaked at $4,690.59. Silver posted even stronger gains, advancing 3.4% to $93.18 per ounce after touching $94.12.

The price surge came after President Trump revealed plans for new tariffs on eight European nations. The announcement targets countries that have opposed US efforts to acquire Greenland. France, Germany, and the United Kingdom are among the affected nations, along with several other European states.

The proposed tariffs would begin at 10% on all goods from these countries starting February 1. Trump indicated the rate would increase to 25% by June if diplomatic negotiations fail. European leaders responded with immediate criticism and began planning coordinated responses.

Global Markets React to Escalating Trade Dispute

The European Union has called for emergency leadership meetings to address the situation. Member states are evaluating multiple response options, according to sources close to the discussions. One proposal under consideration involves imposing retaliatory tariffs on approximately $108 billion worth of American products.

French President Emmanuel Macron is reportedly exploring activation of the EU’s anti-coercion instrument. This policy tool represents the union’s most forceful trade defense mechanism. It grants the EU authority to deploy various economic countermeasures against nations using coercive trade practices.

Currency markets reflected growing investor unease about the trade situation. The Bloomberg Dollar Spot Index declined 0.2% as market participants reduced dollar exposure. Traders increasingly favored traditional safe-haven investments over currency holdings and government bonds.

Investment Flows Support Continued Price Growth

Demand indicators for precious metals show sustained strength across multiple channels. Gold-backed exchange-traded funds increased their holdings by 28 tons during the previous week. The 0.9% expansion represented the largest weekly addition since September 2025.

Major banking institutions are projecting further price appreciation for both metals. Citigroup released forecasts last week predicting gold would climb to $5,000 per ounce within 90 days. The firm also expects silver to reach the $100 per ounce level.

Monetary policy expectations are providing additional support for precious metal prices. Investors anticipate the Federal Reserve will begin cutting interest rates during 2026. Recent data showing economic softening and declining inflation have reinforced these expectations.

Rate cuts typically boost precious metal prices by lowering the relative cost of holding non-yielding assets. This dynamic encourages portfolio reallocation toward gold and silver during periods when central banks ease policy.

Platinum advanced more than 1% to $2,358.69 per ounce on Monday. Copper futures gained 0.6% to reach $12,881.0 per ton on the London Metal Exchange. The copper move followed Chinese economic data confirming the country met its 5% annual growth target.

The US Supreme Court is scheduled to hear arguments Wednesday concerning Trump’s effort to dismiss Federal Reserve governor Lisa Cook. The case carries implications for central bank independence that investors are monitoring closely.

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