Gold surged past $4,700 an ounce to a record high, and silver also reached an all-time peak. The standoff between the US and Europe over control of Greenland showed no sign of de-escalation.
Markets are waiting for Europe's response to Trump's threat to impose tariffs on eight European nations that oppose his Greenland ambitions. The US Supreme Court once again did not issue a ruling on Trump's country-specific tariffs.
Elsewhere, a meltdown in Japanese government debt rippled through global bond markets. A gauge of dollar strength fell by the most in over a month.
The US threat toward its NATO allies has rattled markets, adding renewed impetus to a record-breaking rally. Gold prices have risen nearly 75% over the past 12 months.
Japanese Prime Minister Sanae Takaichi's tax-cutting election pitch has highlighted the mounting sovereign debts among developed economies worldwide. High fiscal deficits have helped fuel bullion's gains through 2025, as investors bet on inflation as the only path to solvency. A weaker dollar also makes commodities more affordable for buyers in other currencies.
Investors are also watching for developments from Davos, where Trump said he will meet with several parties to discuss his plan to take control of the Danish territory. French President Emmanuel Macron intends to request activation of the European Union's anti-coercion instrument. German Chancellor Friedrich Merz said he is trying to get Macron to tone down his response.
"I do not understand what you are doing on Greenland," Macron told Trump in a text the US President later shared on social media. Trump also took a swipe at Macron for rejecting an invitation to back his latest peace initiative and suggested the US would impose duties on French wine and champagne.
"We have entered an era of resource nationalism between the major powers," Peter Kinsella, global head of FX strategy at Union Bancaire Privee SA, said in an interview on Bloomberg Television. Currencies are not necessarily the best way to play this geopolitical theme, as "the best way to play it is through precious metals exposure," he said.
Gold recorded its best annual performance since 1979 last year, supported by falling US interest rates, continued central bank buying and ructions to the geopolitical landscape brought about by Washington. Silver's rally has been even greater, with prices tripling over the past year.
"The Greenland episode has poured fresh fuel on a rally that has been building for months, driven by a macro and geopolitical backdrop that has become increasingly uncomfortable for investors reliant on financial assets alone," Ole Hansen, a strategist at Saxo Bank A/S, said in a note.
Gold rose 1.5% to $4,739.38 an ounce as of 11:24 a.m. in New York, after earlier touching a record $4,750.94. Silver slipped 0.2% to $94.1781. The Bloomberg Dollar Spot Index dropped 0.3% amid a steep selloff in Treasuries. Platinum and palladium advanced.
Still, bullion's gains have been rapid enough to give some investors pause for thought. A majority of fund managers thought gold was the "most crowded trade," in a Bank of America Corp. survey conducted before the weekend's escalations over Greenland. Some 45% of respondents thought gold was "overvalued," tying with May 2025 as the highest share on record.