Gold and silver reached record highs on Monday as President Donald Trump's intensified efforts to take over Greenland raised concerns about a damaging trade war between the United States and Europe. Spot gold rose as much as 2.1% to nearly $4,700 an ounce, while silver surged up to 4.4%. The US announced it will impose tariffs on eight European countries, including France, Germany, and the UK, that oppose the Greenland acquisition plan.
The tariffs will start at 10% on February 1 and increase to 25% in June. European leaders are discussing response options, which could include retaliatory levies on €93 billion ($108 billion) of US goods, according to people familiar with the talks.
German Finance Minister Lars Klingbeil said Monday in Berlin, alongside French counterpart Roland Lescure, "We are constantly experiencing new provocations, we are constantly experiencing new antagonism, which President Trump is seeking, and here we Europeans must make it clear that the limit has been reached."
French President Emmanuel Macron may request activation of the European Union's anti-coercion instrument, Bloomberg reported. This tool allows the EU to deploy various steps in response to coercive trade measures.
Peter Mallin-Jones, an analyst at Peel Hunt LLP, said the US tariff threats over Greenland are "reminiscent of a mafia extortion racket." He added, "The precious metal impact looks a reaction to a move away from US dollar assets and the potential inflationary impact of a trade war between the US and EU, let alone a chilling effect on economic activity."
Charu Chanana, chief investment strategist at Saxo Markets in Singapore, said the Greenland tensions differ from last year's tariffs as they "point to a deeper geopolitical fault line." She noted, "Using tariff threats inside the alliance is a kind of trust shock that can leave a stickier risk premium," referring to NATO.
Spot gold climbed 1.6% to $4,668.46 an ounce as of 10:01 a.m. in London, after hitting a peak of $4,690.59. Silver was up 3.3% at $93.0744, having earlier touched $94.1213. Platinum rose and palladium edged higher. The Bloomberg Dollar Spot Index declined 0.2%.
Investors will watch the US Supreme Court's argument on Wednesday regarding Trump's effort to fire Fed governor Lisa Cook, which could be pivotal for the central bank's independence.