Gold and silver prices hit record highs but stock prices fell on Monday as investors reacted to Donald Trump’s threat as US President to impose new tariffs on eight European countries in protest over his proposed annexation of Greenland.
On Monday, gold prices hit $4,689.39 (£3,499) an ounce, while silver rose to a peak of $94.08 an ounce.
Precious metals are considered safe haven assets in times of uncertainty, and the prices of both gold and silver have risen over the past year.
But stock markets in Europe fell as investors were worried about the latest increase in geopolitical tensions.
On Saturday, Trump announced 10% tariffs on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland, which will take effect on Feb. 1 but could later rise to 25%—and will last until an agreement is reached on Greenland.
Reports suggest the EU is considering responding with a €93bn (£80bn) package of tariffs on US imports.
Concerns over the Greenland dispute led to another rise in gold
Concerns over the Greenland dispute led to another rise in gold and silver prices as investors turned to “safe haven” assets.
Last year, the price of gold rose by more than 60% due to concerns about global tensions and economic uncertainty.
However, there are other factors behind the rise, including expectations of more interest rate cuts, central banks adding hundreds of tonnes of gold to their reserves, and – with respect to silver – China announcing a ban on exports of the metal.
Susannah Streeter, chief investment strategist at the Wealth Club, stated that gold’s shine has propelled it to new record highs.
“The precious metal holds even more attraction as a safe haven as concerns spread about the consequences of aggressive US trade and geopolitical policies.”
However, despite the recent strong performance of gold and silver, stocks experienced a decline.
London’s FTSE 100 index closed down about 0.4%, while the FTSE 250 – which has more domestically concentrated companies – closed 0.9% lower. Financial companies and industrial stocks were mixed lower, but shares of gold miners Fresnillo and Endeavour rose after the latest rise in precious metals prices.
Shares of automotive, technology, and luxury goods companies across Europe fell sharply.
In Germany, the DAX index fell 1.3%, with car companies BMW, Mercedes-Benz and VW all falling about 2-3%.
In France, the CAC 40 index was down 1.8%, with luxury brands LVMH and Hermes among the losers.
However, European defence stocks rose, with Germany’s Rheinmetall and France’s Thales both trading higher.
America’s markets remain closed on Monday due to a public holiday.
“Fears that a tough trade deal between Europe and the US could now be scrapped have led to a significant decline in European indices,” said Danny Hewson, head of financial analysis at AJ Bell.
However, the US Supreme Court is set to rule on whether President Trump overstepped his authority by using the International Emergency Economic Powers Act to impose certain tariffs, a decision that could come as soon as Tuesday.
Hewson said “there could be another major reversal” if the court strikes down Trump’s tariffs.
The latest forecast from the International Monetary Fund (IMF) indicates that trade tensions pose a significant risk to global economic growth.
In its latest World Economic Outlook – prepared before the latest tariff threat emerged – it described the global economy as “stable” but said risks to growth included the end of the AI boom and a “flare-up” in trade tensions.
