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Precious metals hit all-time highs amid trade tensions
Gold and silver prices reached unprecedented levels on Monday as investors sought refuge in safe-haven assets following U.S. President Donald Trump's threat to impose new tariffs on eight European nations opposing his Greenland acquisition bid.
Gold climbed to $4,689.39 per ounce, while silver peaked at $94.08 per ounce, reflecting growing unease over escalating geopolitical risks.
Trump's tariff threat rattles European markets
Stock markets across Europe declined as investors reacted to Trump's announcement over the weekend. The U.S. president revealed plans to impose a 10% tariff on imports from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland starting February 1. The levies could later increase to 25% and remain in place until a Greenland deal is finalized.
The European Union is reportedly considering retaliatory measures, including a €93 billion package of tariffs on U.S. goods.
Why gold and silver are surging
Precious metals have been on a strong upward trajectory, with gold rising over 60% in the past year. Analysts attribute the rally to multiple factors, including expectations of interest rate cuts, central banks bolstering gold reserves, and China's restrictions on silver exports.
"Gold has hit fresh record highs on its glittering run upwards. The precious metal is holding even more allure as a safe haven as worries spread about the repercussions of the U.S.'s aggressive trade and geopolitical policies."
Susannah Streeter, Chief Investment Strategist at Wealth Club
European stocks slide as trade fears mount
European equities fell sharply, with automotive, technology, and luxury goods sectors bearing the brunt of the losses. Germany's DAX index dropped 1.3%, led by declines in BMW, Mercedes-Benz, and Volkswagen. France's CAC 40 slid 1.8%, with luxury brands LVMH and Hermès among the hardest hit.
In the UK, the FTSE 100 closed 0.4% lower, while the FTSE 250, which includes more domestically focused firms, fell 0.9%. However, shares of gold miners Fresnillo and Endeavour rose in response to the surge in precious metal prices.
Defense stocks bucked the trend, with Germany's Rheinmetall and France's Thales posting gains.
Supreme Court ruling could escalate tensions
The U.S. Supreme Court is set to rule as early as Tuesday on whether Trump exceeded his authority by imposing tariffs under the International Emergency Economic Powers Act. Analysts warn that a decision against the administration could further destabilize markets.
"Fears that a hard-fought trade deal between Europe and the U.S. might now be off the cards contributed to significant falls across European indices. A Supreme Court ruling against Trump's tariffs could bring another huge upset."
Danni Hewson, Head of Financial Analysis at AJ Bell
IMF warns of trade risks to global growth
The International Monetary Fund (IMF) recently highlighted trade tensions as a major threat to global economic stability. In its latest outlook, the IMF described the global economy as "steady" but cautioned that risks include a potential slowdown in AI-driven growth and renewed trade disputes.
U.S. markets were closed on Monday for a public holiday, leaving European investors to navigate the fallout alone.
