Gold prices surged to record highs on Monday, as investors flocked to safe-haven assets in response to rising tensions, following U.S. President Donald Trump’s caution about imposing further tariffs on European countries concerning the governance of Greenland. Spot gold rose by 1.6% to $4,670.01 per ounce by 0110, after reaching a high of $4,689.39. U.S. gold futures for February delivery rose by 1.8% to $4,677. Spot silver increased by 4.4% to $93.85 per ounce, following a peak of $94.08. On Saturday, Trump pledged to impose a series of escalating tariffs on European allies until the United States is granted the opportunity to purchase Greenland, intensifying a dispute regarding the future of Denmark’s expansive Arctic territory.
European Union ambassadors achieved a comprehensive consensus on Sunday to intensify efforts aimed at discouraging Trump from implementing tariffs on European allies, while simultaneously preparing countermeasures in the event that the duties are enacted, according to diplomats. U.S. stock futures and the dollar experienced a decline as Trump’s recent tariff threats intensified investors’ appetite for safe-haven assets such as gold, the yen, and the Swiss franc, resulting in a pervasive risk-averse sentiment across the markets.
Vice Chair for Supervision of the Federal Reserve On Friday, Michelle Bowman indicated that a fragile job market, which has the potential to decline swiftly, suggests that the U.S. central bank ought to be ready to reduce interest rates once more if required. Gold, which does not yield interest, thrives in an environment characterized by low interest rates and prevailing economic uncertainties. China’s economic growth is likely to have decelerated to a three-year low in the fourth quarter, attributed to a decline in domestic demand. While the annual rate is anticipated to align closely with Beijing’s objectives, ongoing trade tensions and inherent structural imbalances pose significant risks to the economic forecast.
The largest gold-backed exchange-traded fund globally reported an increase in its holdings by 1.01% to 1,085.67 metric tons on Friday. Gold demand in India exhibited a lackluster performance last week as prices surged to unprecedented levels, curtailing retail purchases. In contrast, demand in China remained stable, with consumers poised for the upcoming Lunar New Year. In other precious metals, spot platinum rose by 1.9% to $2,373.08 per ounce, while palladium experienced a gain of 0.5% to $1,809 per ounce.