Gold, silver hit records after Trump's tariff warnings
Gold and silver reached record highs on Monday, while most stock markets declined, following renewed trade war fears triggered by Donald Trump’s threat of tariffs against several European countries over their opposition to the U.S. purchase of Greenland.
The U.S. president has intensified already mounting geopolitical tensions this month by insisting that Washington should take control of the North Atlantic island for national security reasons, News.Az reports, citing AFP.
On Saturday, after discussions failed to resolve a "fundamental disagreement" regarding the Danish autonomous territory, Trump announced plans to impose new levies on eight nations that have refused to comply with his demands.
He said he would impose 10 percent tariffs on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland from February 1 -- rising to 25 percent from June 1 -- if they did not agree to the takeover.
The announcement drew an immediate response, with a joint statement from the countries saying: "Tariff threats undermine transatlantic relations and risk a dangerous downward spiral."
The move also threatened a trade deal signed between the United States and European Union last year, with German Foreign Minister Johann Wadephul telling ARD television: "I don't believe that this agreement is possible in the current situation."
Meanwhile, aides to French President Emmanuel Macron said he would ask the EU to activate a never-before-used "anti-coercion instrument" against Washington if Trump makes good on his threat.
This measure allows for curbing imports of goods and services into the EU, a market of 27 countries with a combined population of 450 million.
Bloomberg reported member states were discussing the possibility of retaliatory levies on €93 billion ($108 billion) of US goods.
The prospect of a trade war between the global economic heavyweights shook markets, with safe haven assets extending gains that had come on the back of Trump's threats against Iran last week and the US ouster of Venezuelan president Nicolas Maduro.
Gold, a key go-to in times of turmoil, hit a peak of $4,690.59, while silver struck $94.12.
On equity markets, Tokyo, Hong Kong, Shanghai, Sydney, Singapore and Wellington retreated, though there were gains in Seoul and Taipei.
European and US futures sank.
The dollar also retreated against its peers, with the euro, sterling and yen all higher.
"The next signpost is whether this moves from rhetoric to policy, and that is why the concrete dates matter," wrote Charu Chanana, chief investment strategist at Saxo Markets.
"On the European side, the decision path matters as much as the headline, because there is a difference between merely mentioning the anti-coercion instrument as a signal and formally pursuing it as action.
"Even if the immediate tariff threat gets negotiated down, the structural risk is that fragmentation keeps rising, with more politicised trade, more conditional supply chains, and higher policy risk for companies and investors."
There was little major reaction to data showing China's economy expanded five percent last year, in line with its target. However, growth in the final three months slowed sharply from the previous quarter.
Investors in Seoul and Taipei brushed off a warning from US Commerce Secretary Howard Lutnick that South Korean chipmakers and Taiwan firms not investing in the United States could be hit with 100 percent tariffs unless they boost output in the country.
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