Gold surpassed $4,700 an ounce to reach a record high, with silver also hitting an all-time peak, as tensions over U.S. efforts to take control of Greenland showed no signs of easing.
Financial markets are awaiting the European Union’s response to President Donald Trump’s threat of tariffs on eight European nations that oppose his Greenland proposal. Meanwhile, a selloff in Japanese government bonds affected global bond markets, and a key index measuring dollar strength posted its largest drop in more than a month.
Concerns over U.S. threats toward NATO allies contributed to the momentum behind gold, which has gained nearly 75% over the past 12 months.
In Japan, Prime Minister Sanae Takaichi’s election plan, which includes tax cuts, has drawn attention to increasing sovereign debt levels across developed nations. High fiscal deficits are cited by some investors as a key factor behind a rise in precious metal prices through 2025, in part due to inflation expectations. A weaker dollar has also made commodities like gold more accessible to international buyers.
Investors are watching for developments out of Davos, where Trump said he would meet with several parties to discuss Greenland. French President Emmanuel Macron is expected to push for the use of the EU’s anti-coercion instrument, though German Chancellor Friedrich Merz has urged a more restrained approach.
“I do not understand what you are doing on Greenland,” Macron wrote in a text message to Trump, which the president later posted on social media. Trump also criticized Macron for not supporting his current peace effort and said the U.S. may impose tariffs on French wine and champagne.
“We have entered an era of resource nationalism between the major powers,” said Peter Kinsella, global head of foreign exchange strategy at Union Bancaire Privee, in an interview with Bloomberg Television. He added that precious metals are among the best assets to hold in the current geopolitical climate.
Gold had its strongest annual performance since 1979 last year, supported by falling U.S. interest rates, ongoing central bank purchases, and geopolitical shifts. Silver prices have tripled over the same period.
