Trade war concerns ignited a wave of safe-haven buying, sending both gold and silver to record highs.
2026-01-20 00:08:54
On Saturday, President Trump restarted the trade war against Europe, threatening to impose tariffs of 10% on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland, with the rate potentially rising to 25%. This move is aimed at pressuring U.S. allies to support the U.S. claim to acquire Greenland.
Following Trump's social media post, members of the European Parliament quickly responded, announcing a freeze on the approval process for the trade agreement reached last summer between Trump and European Commission President Ursula von der Leyen. Some members of the European Parliament also called for retaliatory trade measures.
The renewed trade war has put downward pressure on the dollar, further boosting gold and silver prices. Spot gold was trading at $4,674.58 per ounce, up 1.72% on the day; spot silver was trading at $93.814 per ounce, up 4.19% on the day.
Lin Chen, senior market analyst at XS.com, said: "Gold's sharp reaction to tariff-related news highlights a shift in market sentiment—from simply focusing on economic growth or inflation to viewing policy uncertainty as a core factor driving the market. Tariffs not only disrupt trade flows but can also have spillover risks to supply chains, corporate profit margins, and medium-term growth expectations. As the probability of escalation increases, defensive funds tend to preemptively position themselves rather than waiting for substantial economic data to emerge. In this context, gold plays the role of a portfolio risk hedge."
The day coincided with Martin Luther King Jr. Day, and US stock markets were closed. However, analysts predict that the market may experience significant volatility this week, and investors will need to cope with a volatile economic environment, which is expected to further enhance the safe-haven appeal of gold and silver.
Analysts point out that European countries may prioritize targeting large U.S. technology companies in trade retaliation. Given that this industry has been a core driver of U.S. economic growth, such retaliatory measures could have a significant impact on U.S. economic activity.
(Spot gold daily chart source: FX678)
Michael Brown, senior market analyst at Pepperstone, said, "I would assert that this is yet another 'art of the deal'—first throwing out outrageous threats, escalating the situation significantly, forcing the other side to focus on responding, then extracting concessions, and ultimately reaching some kind of agreement in a shorter time than usual. The pros and cons of this strategy, and the potential long-term geopolitical implications, are left for others to judge. But for the market, this situation means that in the short term, the market will be volatile due to the overwhelming news noise until the next 'agreement moment' arrives, at which point the market will see a rebound." He added, "Unsurprisingly, during this period of sustained news noise, some investors may choose to close out risky long positions to take profits or hedge downside risk through options. However, all of this will further solidify the already extremely strong bullish logic of precious metals such as gold and silver, whose 'path of least resistance' to price increases remains clear."
(Spot silver daily chart source: EasyTrade)
David Morrison, senior market analyst at Trade Nation, pointed out that although the precious metals sector is facing increasing headwinds, the impact of safe-haven demand has outweighed this factor, and the market generally expects the Federal Reserve to keep interest rates unchanged until at least June this year.
He stated, "Although market expectations for multiple rate cuts by the Federal Reserve in the second half of 2026 have cooled somewhat, the upward momentum of gold remains unabated, supported by a general decline in investor confidence in other dollar assets. As global market investors are forced to adjust their risk expectations, gold continues to attract defensive inflows."
Silver, which possesses both monetary and industrial attributes, has consistently outperformed gold due to the continued pressure on its supply chain.
David Morrison added, "Although the daily MACD indicator shows that silver is severely overbought, silver prices remain high, and there are few signs that buyers will back down. The prevailing bullish view is that silver supply is scarce, while demand from investors and the industrial sector remains strong. Like gold, the weakening dollar in early trading today has further boosted bullish sentiment in the market."
Following Trump's social media post, members of the European Parliament quickly responded, announcing a freeze on the approval process for the trade agreement reached last summer between Trump and European Commission President Ursula von der Leyen. Some members of the European Parliament also called for retaliatory trade measures.
The renewed trade war has put downward pressure on the dollar, further boosting gold and silver prices. Spot gold was trading at $4,674.58 per ounce, up 1.72% on the day; spot silver was trading at $93.814 per ounce, up 4.19% on the day.
Lin Chen, senior market analyst at XS.com, said: "Gold's sharp reaction to tariff-related news highlights a shift in market sentiment—from simply focusing on economic growth or inflation to viewing policy uncertainty as a core factor driving the market. Tariffs not only disrupt trade flows but can also have spillover risks to supply chains, corporate profit margins, and medium-term growth expectations. As the probability of escalation increases, defensive funds tend to preemptively position themselves rather than waiting for substantial economic data to emerge. In this context, gold plays the role of a portfolio risk hedge."
The day coincided with Martin Luther King Jr. Day, and US stock markets were closed. However, analysts predict that the market may experience significant volatility this week, and investors will need to cope with a volatile economic environment, which is expected to further enhance the safe-haven appeal of gold and silver.
Analysts point out that European countries may prioritize targeting large U.S. technology companies in trade retaliation. Given that this industry has been a core driver of U.S. economic growth, such retaliatory measures could have a significant impact on U.S. economic activity.
(Spot gold daily chart source: FX678)
Michael Brown, senior market analyst at Pepperstone, said, "I would assert that this is yet another 'art of the deal'—first throwing out outrageous threats, escalating the situation significantly, forcing the other side to focus on responding, then extracting concessions, and ultimately reaching some kind of agreement in a shorter time than usual. The pros and cons of this strategy, and the potential long-term geopolitical implications, are left for others to judge. But for the market, this situation means that in the short term, the market will be volatile due to the overwhelming news noise until the next 'agreement moment' arrives, at which point the market will see a rebound." He added, "Unsurprisingly, during this period of sustained news noise, some investors may choose to close out risky long positions to take profits or hedge downside risk through options. However, all of this will further solidify the already extremely strong bullish logic of precious metals such as gold and silver, whose 'path of least resistance' to price increases remains clear."
(Spot silver daily chart source: EasyTrade)
David Morrison, senior market analyst at Trade Nation, pointed out that although the precious metals sector is facing increasing headwinds, the impact of safe-haven demand has outweighed this factor, and the market generally expects the Federal Reserve to keep interest rates unchanged until at least June this year.
He stated, "Although market expectations for multiple rate cuts by the Federal Reserve in the second half of 2026 have cooled somewhat, the upward momentum of gold remains unabated, supported by a general decline in investor confidence in other dollar assets. As global market investors are forced to adjust their risk expectations, gold continues to attract defensive inflows."
Silver, which possesses both monetary and industrial attributes, has consistently outperformed gold due to the continued pressure on its supply chain.
David Morrison added, "Although the daily MACD indicator shows that silver is severely overbought, silver prices remain high, and there are few signs that buyers will back down. The prevailing bullish view is that silver supply is scarce, while demand from investors and the industrial sector remains strong. Like gold, the weakening dollar in early trading today has further boosted bullish sentiment in the market."
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