Gold Hits New Record, Greenland Crisis Sends Markets Running
Gold rose to a new record as the Greenland crisis worsened and global markets returned to "safety" mode. Geopolitical tensions and the re-emergence of US-Europe relations prompted investors to reduce risk and turn to haven assets like gold and silver.
US President Donald Trump, who attended the World Economic Forum (WEF) in Davos, showed no signs of backing down from his ambition to take over Greenland. This situation prompted a warning from Greenland's leader to his citizens about a possible military threat, although he considered the scenario of an invasion remote.
On the spot market, gold briefly reached a record $4,849.73 per ounce before fluctuating. Silver also remained high, hovering around $94, near its all-time high, indicating strong safe-haven demand.
Geopolitical pressure intensified after the US threatened tariffs on eight European countries—including Germany, France, and the UK—that opposed Trump's Greenland plan. This threat revived the specter of a trade war that could undermine global economic growth and escalate it.
In Davos, the war talk intensified. French President Emmanuel Macron criticized Trump's trade tactics and stressed the need for Europe to be more sovereign and less dependent on others. At the same time, Canadian Prime Minister Mark Carney said the rules-based international order was no longer working as it used to.
These rapidly escalating tensions demonstrate how quickly relations between traditional US allies are deteriorating. The impact is being felt in the markets: the dollar is tending to weaken, while interest in hedging instruments like gold is increasing.
In addition to geopolitical factors, the market is also shaken by concerns about the fiscal conditions of major economies, triggered by turmoil in the Japanese government bond market. This situation is fueling the "debasement trade," where investors avoid currencies and government bonds and choose assets considered more resilient, such as gold.
One commodity analyst believes the current gold rally is largely driven by the question of "confidence." As long as confidence in currencies and bonds hasn't completely collapsed, the market can still hold its ground. However, if that confidence is shattered, gold's upward momentum could be longer and stronger.
On the demand side, gold is also receiving additional support from central bank actions. Poland is reportedly preparing plans to purchase an additional 150 tons, while Bolivia's central bank is resuming foreign exchange purchases after new regulations take effect in December 2025.
In midday trading in Singapore, spot gold was still up around 1.6% at around $4,839.21 per ounce. The dollar index tended to stabilize after weakening in the previous two sessions, indicating the market is still weighing geopolitical risks and future policy directions.
5 key points:
- Gold hits a new record as the Greenland crisis sparks safe-haven flows.
- Trump shows no sign of backing down in Davos; Greenland's leader warned of a military risk (albeit small).
- US tariff threats against eight European countries raise the risk of a trade war and weigh on global sentiment.
- Japanese government bond volatility is contributing to the "debasement trade" (avoid currencies and bonds, choose gold).
- Central bank demand strengthens: Poland plans to add 150 tons, Bolivia continues to buy for foreign exchange reserves. (asd)
Source: Newsmaker.id
