Gold Trading Alert: Trump's "Island Seizure" Tariffs Cause a Stir! Gold Prices Surge Near $4700; Pay Attention to the Davos Forum
2026-01-20 07:37:34
In early 2026, amidst a rapidly shifting global geopolitical landscape, the "Greenland dispute," triggered by US President Trump, quickly escalated into a catalyst for international trade friction. This not only caused a significant upheaval in US-EU relations but also directly ignited a surge in demand for safe-haven assets. On Monday (January 19), spot gold prices soared to a record high of $4,690.46 per ounce, as investors turned to gold amidst uncertainty. This safe-haven demand not only pushed up precious metal prices but also exposed the potential fragility of the global economy. On Tuesday (January 20) in early Asian trading, spot gold fluctuated at high levels, trading around $4,670 per ounce, with market attention shifting towards the World Economic Forum in Davos.
It all stems from Trump's "purchasing ambitions" for Greenland. Last weekend, the US president publicly announced on the social media platform Truth Social that he would impose an additional 10% tariff on imports from European countries including Denmark, Sweden, France, Germany, the Netherlands, Finland, the UK, and Norway, starting February 1st, until the US successfully acquires Greenland.
This threat is not unfounded; it is built on the fragile foundation of the 2025 US-EU tariff agreement. By mid-2025, the US and EU had just eased the turmoil caused by the trade war through negotiations. Now, Trump's actions are like a bombshell, once again pushing European businesses into the spotlight. EU diplomats held emergency consultations, reaching a consensus not only to strengthen dissuasion efforts but also to prepare retaliatory measures, including imposing tariffs on €93 billion worth of US imports or invoking previously unused "anti-coercion tools" to restrict US companies' public bidding, investment, and banking activities in Europe.
This politically motivated tariff strategy has quickly triggered a chain reaction in the industry. The French wine and spirits export sector has already been severely affected, with business in the US market expected to decline by 20% to 25% in the second half of 2025; the new tariffs will have an even more severe impact. The German chemical and pharmaceutical industries have also warned that a "tariff spiral" will exacerbate the economic burden on both sides of the Atlantic, leading to difficult investment decisions and a loss of predictability.
Analysts point out that internal divisions within the EU could exacerbate the problem. For example, countries not included in the tariff list, such as Spain and Italy, may circumvent the risks by diverting trade, but this could also undermine the EU's single market. Trump's move not only tests EU unity but also highlights the US's assertive stance in global trade. If the Supreme Court overturns its tariff authorization based on emergency laws, the government is prepared to invoke other laws to quickly introduce new measures to ensure the "trade war" does not easily subside.
Faced with this geopolitical uncertainty, financial markets quickly shifted to a defensive stance. Gold, as the preferred safe-haven asset, jumped 1.7% on Monday, with spot gold closing at $4,670.79 per ounce, after hitting a record high of $4,690.46 in the morning. US gold futures also rose 1.8% to $4,677.70 per ounce. Silver also performed strongly, surging 5% to $94.41 per ounce, after hitting a new high of $94.65 in the morning on Monday and briefly reaching a high of $94.68 per ounce in Asian trading on Tuesday. Its year-to-date gain has exceeded 32%. This simultaneous rise in both metals stems directly from investors' concerns about a renewed trade war. Market analysts say that when institutional and policy risks resurface, funds tend to quickly reallocate to safe havens like gold.
The deeper reason lies in the weakening of the US dollar. Trump's tariff threats triggered investor anxiety, leading to a broad decline in the dollar and pushing the euro, pound, and Scandinavian currencies back from their lows, while safe-haven currencies like the Swiss franc recorded their biggest single-day gain in a month. The decline in the dollar further amplified the appeal of gold, as gold is priced in dollars, and when the dollar weakens, gold prices naturally rise.
In addition, spot platinum and palladium also rose slightly, up 1.5% and 1.1% respectively, indicating that the precious metals sector as a whole benefited from safe-haven buying. Experts analyze that this market reaction is similar to the scenario when Trump announced comprehensive tariffs in April 2025, when a crisis of confidence in US assets led to capital outflows, and now the Greenland dispute has amplified this effect once again. If tensions escalate, the upward momentum of gold may continue, and it may even challenge the $5,000 mark.
The Federal Reserve's actions played a crucial role in this event. Fed Vice Chairman for Supervision Bowman warned last Friday that the fragile job market could weaken rapidly, suggesting the Fed was prepared to cut interest rates further. The market expects the January 27-28 meeting to hold rates steady, but at least two 25-basis-point cuts throughout the year have become the consensus. This expectation of easing further weakened the dollar, driving safe-haven funds into gold and currencies such as the yen and Swiss franc.
The dollar index fell 0.34% on Monday, its biggest one-day drop in nearly four weeks. The euro rose 0.3% against the dollar to 1.1643, and the pound rose 0.31% against the dollar to 1.3418. This widespread risk aversion not only reflects investors' immediate reaction to the trade war but also suggests that if the EU retaliates, the dollar may face temporary pressure, but in the long run, the US's export advantage may in turn support a dollar rebound.
From a broader perspective, Europe's export dependence on the US far outweighs that of the US, and strategists at Societe Generale point out that an escalation of the trade war would be more detrimental to Europe, potentially further enhancing gold's status as a neutral safe-haven asset. The heads of German submarine manufacturers and the chemical industry association have called for Europe to strengthen its independent stance and reduce its dependence on the US, which might spur more joint projects, but in the short term will only exacerbate uncertainty. In this environment, gold becomes an ideal tool for investors to hedge against geopolitical risks; while its price volatility is high, it also holds the potential for substantial returns.
The upcoming World Economic Forum in Davos, Switzerland, has become the next focal point of this dispute. Trump is expected to arrive on Wednesday and deliver a special address, and will also invite global business leaders, including CEOs from the finance and consulting sectors, to a reception. US Treasury Secretary Bessenter will accompany him and warn Europe against retaliatory action, emphasizing that "everyone should trust the president." Meanwhile, Chinese Vice Premier He Lifeng will also attend and deliver a speech, meeting with business executives, while a Russian envoy and national security advisors from several countries will discuss the Greenland issue on the sidelines of the forum. This gathering of global elites, which should have focused on emerging economies and development issues, has instead been dominated by Trump's policy actions, highlighting the United States' dominance on the international stage.
Business leaders are polarized in their assessment of Trump's style. Some see it as a "hammer-wielding negotiating" tactic that aligns with US interests, while others worry about its destabilizing nature. The CEO of Franklin Templeton believes Trump's intuition about securing a long-term strategic position for the US is correct, but this could amplify market volatility in the short term. If Davos facilitates dialogue between the US and Europe, the safe-haven demand for gold may ease; conversely, if the conflict escalates, gold prices could continue to rise. Investors should closely monitor the summit's developments as a key signal for judging gold's future direction.
In conclusion, Trump's threat of tariffs on Greenland has swept through global markets like a storm, driving gold and silver to new highs. This not only tests the resilience of US-EU relations but also highlights the core value of gold in times of uncertainty. Despite strong short-term safe-haven buying, the long-term outlook for gold depends on the evolution of the trade war, Federal Reserve policy, and the outcome of the Davos Summit. Investors should make rational investments, seizing opportunities while remaining vigilant about risks, and finding their own safe haven amidst this gold price surge.
In addition, it is necessary to closely monitor Trump's developments. U.S. Trade Representative Jamieson Greer stated in an interview with The New York Times on Monday that if the Supreme Court overturns the comprehensive global tariffs initiated by Trump under the emergency declaration law, his administration will announce new tariff measures almost immediately. The Supreme Court may issue a ruling on the tariffs in the coming weeks, possibly as early as Tuesday. According to The New York Times, Greer indicated that the administration will replace these tariffs with other tax measures "starting the next day."
(Spot gold daily chart, source: FX678)
At 07:36 Beijing time, spot gold was trading at $4,668.60 per ounce.
Greenland dispute escalates: the trigger for Trump's tariff threats
It all stems from Trump's "purchasing ambitions" for Greenland. Last weekend, the US president publicly announced on the social media platform Truth Social that he would impose an additional 10% tariff on imports from European countries including Denmark, Sweden, France, Germany, the Netherlands, Finland, the UK, and Norway, starting February 1st, until the US successfully acquires Greenland.
This threat is not unfounded; it is built on the fragile foundation of the 2025 US-EU tariff agreement. By mid-2025, the US and EU had just eased the turmoil caused by the trade war through negotiations. Now, Trump's actions are like a bombshell, once again pushing European businesses into the spotlight. EU diplomats held emergency consultations, reaching a consensus not only to strengthen dissuasion efforts but also to prepare retaliatory measures, including imposing tariffs on €93 billion worth of US imports or invoking previously unused "anti-coercion tools" to restrict US companies' public bidding, investment, and banking activities in Europe.
This politically motivated tariff strategy has quickly triggered a chain reaction in the industry. The French wine and spirits export sector has already been severely affected, with business in the US market expected to decline by 20% to 25% in the second half of 2025; the new tariffs will have an even more severe impact. The German chemical and pharmaceutical industries have also warned that a "tariff spiral" will exacerbate the economic burden on both sides of the Atlantic, leading to difficult investment decisions and a loss of predictability.
Analysts point out that internal divisions within the EU could exacerbate the problem. For example, countries not included in the tariff list, such as Spain and Italy, may circumvent the risks by diverting trade, but this could also undermine the EU's single market. Trump's move not only tests EU unity but also highlights the US's assertive stance in global trade. If the Supreme Court overturns its tariff authorization based on emergency laws, the government is prepared to invoke other laws to quickly introduce new measures to ensure the "trade war" does not easily subside.
Risk aversion surges: Gold and silver both hit record highs
Faced with this geopolitical uncertainty, financial markets quickly shifted to a defensive stance. Gold, as the preferred safe-haven asset, jumped 1.7% on Monday, with spot gold closing at $4,670.79 per ounce, after hitting a record high of $4,690.46 in the morning. US gold futures also rose 1.8% to $4,677.70 per ounce. Silver also performed strongly, surging 5% to $94.41 per ounce, after hitting a new high of $94.65 in the morning on Monday and briefly reaching a high of $94.68 per ounce in Asian trading on Tuesday. Its year-to-date gain has exceeded 32%. This simultaneous rise in both metals stems directly from investors' concerns about a renewed trade war. Market analysts say that when institutional and policy risks resurface, funds tend to quickly reallocate to safe havens like gold.
The deeper reason lies in the weakening of the US dollar. Trump's tariff threats triggered investor anxiety, leading to a broad decline in the dollar and pushing the euro, pound, and Scandinavian currencies back from their lows, while safe-haven currencies like the Swiss franc recorded their biggest single-day gain in a month. The decline in the dollar further amplified the appeal of gold, as gold is priced in dollars, and when the dollar weakens, gold prices naturally rise.
In addition, spot platinum and palladium also rose slightly, up 1.5% and 1.1% respectively, indicating that the precious metals sector as a whole benefited from safe-haven buying. Experts analyze that this market reaction is similar to the scenario when Trump announced comprehensive tariffs in April 2025, when a crisis of confidence in US assets led to capital outflows, and now the Greenland dispute has amplified this effect once again. If tensions escalate, the upward momentum of gold may continue, and it may even challenge the $5,000 mark.
Federal Reserve Policy and its Link to Global Currency Markets: A Catalyst for Gold Price Increases
The Federal Reserve's actions played a crucial role in this event. Fed Vice Chairman for Supervision Bowman warned last Friday that the fragile job market could weaken rapidly, suggesting the Fed was prepared to cut interest rates further. The market expects the January 27-28 meeting to hold rates steady, but at least two 25-basis-point cuts throughout the year have become the consensus. This expectation of easing further weakened the dollar, driving safe-haven funds into gold and currencies such as the yen and Swiss franc.
The dollar index fell 0.34% on Monday, its biggest one-day drop in nearly four weeks. The euro rose 0.3% against the dollar to 1.1643, and the pound rose 0.31% against the dollar to 1.3418. This widespread risk aversion not only reflects investors' immediate reaction to the trade war but also suggests that if the EU retaliates, the dollar may face temporary pressure, but in the long run, the US's export advantage may in turn support a dollar rebound.
From a broader perspective, Europe's export dependence on the US far outweighs that of the US, and strategists at Societe Generale point out that an escalation of the trade war would be more detrimental to Europe, potentially further enhancing gold's status as a neutral safe-haven asset. The heads of German submarine manufacturers and the chemical industry association have called for Europe to strengthen its independent stance and reduce its dependence on the US, which might spur more joint projects, but in the short term will only exacerbate uncertainty. In this environment, gold becomes an ideal tool for investors to hedge against geopolitical risks; while its price volatility is high, it also holds the potential for substantial returns.
Davos Summit Outlook: Potential Turning Point for the Gold Market
The upcoming World Economic Forum in Davos, Switzerland, has become the next focal point of this dispute. Trump is expected to arrive on Wednesday and deliver a special address, and will also invite global business leaders, including CEOs from the finance and consulting sectors, to a reception. US Treasury Secretary Bessenter will accompany him and warn Europe against retaliatory action, emphasizing that "everyone should trust the president." Meanwhile, Chinese Vice Premier He Lifeng will also attend and deliver a speech, meeting with business executives, while a Russian envoy and national security advisors from several countries will discuss the Greenland issue on the sidelines of the forum. This gathering of global elites, which should have focused on emerging economies and development issues, has instead been dominated by Trump's policy actions, highlighting the United States' dominance on the international stage.
Business leaders are polarized in their assessment of Trump's style. Some see it as a "hammer-wielding negotiating" tactic that aligns with US interests, while others worry about its destabilizing nature. The CEO of Franklin Templeton believes Trump's intuition about securing a long-term strategic position for the US is correct, but this could amplify market volatility in the short term. If Davos facilitates dialogue between the US and Europe, the safe-haven demand for gold may ease; conversely, if the conflict escalates, gold prices could continue to rise. Investors should closely monitor the summit's developments as a key signal for judging gold's future direction.
In conclusion, Trump's threat of tariffs on Greenland has swept through global markets like a storm, driving gold and silver to new highs. This not only tests the resilience of US-EU relations but also highlights the core value of gold in times of uncertainty. Despite strong short-term safe-haven buying, the long-term outlook for gold depends on the evolution of the trade war, Federal Reserve policy, and the outcome of the Davos Summit. Investors should make rational investments, seizing opportunities while remaining vigilant about risks, and finding their own safe haven amidst this gold price surge.
In addition, it is necessary to closely monitor Trump's developments. U.S. Trade Representative Jamieson Greer stated in an interview with The New York Times on Monday that if the Supreme Court overturns the comprehensive global tariffs initiated by Trump under the emergency declaration law, his administration will announce new tariff measures almost immediately. The Supreme Court may issue a ruling on the tariffs in the coming weeks, possibly as early as Tuesday. According to The New York Times, Greer indicated that the administration will replace these tariffs with other tax measures "starting the next day."
(Spot gold daily chart, source: FX678)
At 07:36 Beijing time, spot gold was trading at $4,668.60 per ounce.
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