Gold and silver have surged to record highs as escalating trade tensions between the US and Europe over Greenland acquisition threats drive increased demand for precious metals. The precious metals rally comes amid threats of significant tariffs and potential retaliatory measures between major economic powers.

Precious Metals Performance

Both gold and silver posted substantial gains as investors sought safe-haven assets amid geopolitical uncertainty. The following table shows the current performance of key precious metals:

As of 8:11 a.m. in Singapore, spot gold reached $4,668.76 per ounce, representing a 1.6% increase, after previously peaking at $4,690.59. Silver demonstrated even stronger performance, rising 3.2% to $93.02 per ounce and reaching a high of $94.12. Both palladium and platinum also posted gains during the trading session.

Trade War Escalation

The precious metals surge follows Trump's threats to impose tariffs on eight European countries that have resisted his plan to purchase Greenland. The targeted countries include major economies such as France, Germany, and the United Kingdom. The proposed tariff structure involves a 10% tax beginning February 1, which would escalate to 25% by June.

European Response Strategy

European leaders are preparing urgent conferences in the coming days to discuss potential countermeasures to the threatened tariffs. According to sources familiar with the discussions, member states are evaluating multiple response options, including retaliatory taxes on $108 billion worth of US imports.

Market Drivers and Federal Reserve Concerns

Precious metals have experienced significant increases throughout 2025, following major geopolitical developments including the US detention of Venezuela's leader and intensified threats regarding Greenland acquisition. Additionally, the Trump administration has escalated criticism of the Federal Reserve, raising concerns about central bank independence and encouraging the debasement trade, where investors avoid government assets and currencies due to debt level concerns.

Market Outlook

The current precious metals rally reflects broader investor concerns about trade stability and monetary policy independence. The combination of threatened tariffs, potential retaliatory measures, and Federal Reserve independence concerns has created a favorable environment for safe-haven assets like gold and silver.

Gold and silver prices surged to record highs on Monday as investors flocked to safe-haven assets amid escalating geopolitical tensions. The precious metals rally was triggered by Trump's threats to impose additional tariffs on European countries over the control of Greenland, creating widespread market uncertainty.

Precious Metals Performance

Both gold and silver achieved remarkable gains during Monday's trading session, with investors seeking refuge in traditional safe-haven assets.

Geopolitical Tensions Drive Market Movement

Trump escalated tensions on Saturday by vowing to implement a wave of increasing tariffs on European allies until the United States is allowed to buy Greenland. This threat has intensified the ongoing dispute over the future of Denmark's vast Arctic island, creating significant market volatility.

European Union ambassadors responded on Sunday by reaching a broad agreement to intensify efforts to dissuade Trump from imposing tariffs on European allies. Simultaneously, EU diplomats confirmed they are preparing retaliatory measures should the duties proceed as threatened.

Broader Market Impact

The tariff threats created a risk-averse environment across global markets. U.S. stock futures and the dollar declined as Trump's latest statements increased investors' appetite for safe-haven assets including gold, yen, and Swiss franc. This broad market movement reflects growing concerns about potential trade disruptions and economic uncertainty.

Economic Factors Supporting Gold

Federal Reserve Vice Chair for Supervision Michelle Bowman indicated on Friday that a fragile job market could weaken quickly, suggesting the U.S. central bank should stand ready to cut interest rates again if needed. Non-yielding gold typically thrives in low interest rate environments and during periods of economic uncertainty.

China's economic growth likely slowed to a three-year low in the fourth quarter as domestic demand softened. While the full-year pace is set to hit close to Beijing's target, trade tensions and structural imbalances pose significant risks to the economic outlook.

Market Indicators and Demand

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, reported its holdings rose 1.01% to 1,085.67 metric tons on Friday. However, gold demand in India remained muted last week as prices hit record highs again, reducing retail buying interest. China's demand stayed steady ahead of the Lunar New Year celebrations.