Trump's announcement of a temporary halt to tariffs on Europe triggered a positive response from markets and European leaders, but the vague details of the agreement caused confusion and were criticized by experts as a "monologue without substance." Market strategists believe that his repeated threats have eroded his credibility, causing allies to become less trusting. Gold prices are affected in the short term by weakened safe-haven demand, but remain supported in the long term by geopolitical uncertainty.

On Friday in Asian trading, spot gold fluctuated upwards and is currently trading around $4,950 per ounce. It touched a record high of $4,967.13 per ounce in the early session, with a daily increase of about 0.3%.



U.S. President Trump's announcement on Wednesday (January 21) that he would not impose new tariffs on European countries for the time being cheered by markets and some European leaders, but others were puzzled.

Trump revealed that he had reached a "framework agreement" with NATO Secretary General Mark Rutte. This came shortly after he announced on the Truth Social platform that he would cancel his threat to impose tariffs on eight European countries, originally scheduled to take effect on February 1st.

However, questions remain regarding the so-called agreement on Greenland. Since President Trump has not revealed the specifics of the framework or specified which countries are involved, one market analyst stated, "No one will believe him anymore."

Agreements without substantive content

Trump outlined the Greenland agreement, describing it in broad terms as the “ultimate long-term agreement,” claiming it would ensure U.S. national security and access to mineral resources.

Greenland's strategic location is crucial for Arctic military deployments, and climate change is making the island more accessible—sparking renewed international attention. However, Trump did not specify whether Denmark, responsible for Greenland's defense, or the Greenlandic authorities had signed any agreements.

Ed Price, a senior visiting fellow at New York University, said on Thursday that reaching an agreement would require “joint efforts from both sides” and described Trump’s speech at the World Economic Forum in Davos, Switzerland, as “a monologue rather than a dialogue.”

Price also stated that the framework is "the beginning of a process, not the end," and warned that the precedent of bargaining on disputed territories could tempt other regions to follow suit.

Why Trump Conceded: US Treasury Yields

Robin Brooks, a senior fellow at the Brookings Institution, said Trump's slower pace of remarks "has nothing to do with Europe" and is more likely due to concerns about the recent surge in global bond yields. Global bond yields have risen sharply due to market fears of a new round of trade war.

Brooks also stated that European countries have limited leverage in negotiations with Trump.

Brooks analyzed, "It's widely believed that European countries have been free-riding on the US security umbrella. They must increase defense spending, and will continue to do so, but most European countries, except for Germany, lack fiscal space. These countries simply don't have any fiscal firepower to speak of."

In a speech in Davos on Wednesday, Trump publicly ruled out the possibility of using force to seize Greenland for the first time, and acknowledged that financial markets were uneasy about his threatening rhetoric.

The largest burrito you can buy

David Roach, a senior investor at Quantum Strategy, said that European leaders should prepare for the worst, no matter how the tariff issue ultimately develops.

Roach called Trump's threat to Greenland "the biggest taco ever," using the market strategy term "Trump always backs down," implying that the market expects the president's threats to ultimately back down.

But Roach points out that this is creating a vicious cycle—the greater Trump’s threats, the more allies expect him to “send troops up and down the mountain.”

Roach stated, "The EU has realized that it can win by confronting them head-on, and no one will believe his threats anymore."

Gold is subject to a mix of bullish and bearish factors, but medium- to long-term support remains.

In the short term, the temporary easing of the trade war has weakened safe-haven demand, reducing gold buying and potentially limiting gold's gains to some extent.

However, in the long run, the competition for resources such as Greenland highlights geopolitical rifts, and President Trump's unpredictable attitude and the normalization of policy uncertainty are expected to provide long-term support for gold.



(Spot gold daily chart, source: FX678)

At 9:23 AM Beijing time, spot gold was trading at $4,943.52 per ounce.