President Donald Trump's "Greenland purchase" gambit is rattling global financial markets. As fears grow that a trade war between the United States and the European Union (EU) will become reality, investors are snapping up gold and silver.
On the 20th (Korea time), according to Reuters, Bloomberg and other major foreign media, international spot gold prices hit an all-time high during intraday trading, touching $4,689.39 per ounce. Silver prices also soared to $94.72 per ounce, breaking the record high.
On the 18th, President Trump singled out eight European countries—Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland—that opposed his Greenland purchase proposal and signaled additional tariff imposition. Starting on the 1st of next month, a 10% tariff will be levied on products imported from these countries, with the rate to be raised to as high as 25% depending on circumstances. The measure will remain in place until the Greenland negotiations are concluded.
European stocks wobbled immediately. On the 19th, the Euro Stoxx 50 index of European blue chips closed at 5,925.62, down 1.72% from the previous session. It was the steepest drop in the past two months. Germany's DAX fell 1.3%, and France's CAC 40 slipped 1.8%. Notably, Denmark's benchmark OMXC, the epicenter of the dispute, plunged 2.73%.
Investors dumped stocks, a risk asset, and rotated into precious metals, which are considered safe assets. Gold and silver are representative safe assets whose value rises when geopolitical crises such as war or trade disputes hit. Lin Tran, chief market analyst at XS.com, told Reuters, "When institutional and policy risks reemerge, the market quickly moves funds into safe assets," adding, "Gold has once again emerged as the most preferred option."
Market jitters are also shaking currency values. The U.S. Dollar Index (DXY), which shows the dollar's value against the currencies of six major countries, stood at 99.03 on the morning of the 20th, down 0.36% from the previous day. The fear of inflation sparked by a trade war and the aversion to U.S. assets overlapped.
In fact, Central Banks in various countries have recently stocked their gold vaults to reduce reliance on the dollar. According to the World Gold Council (WGC), global net gold purchases by central banks reached 45 tons in November last year alone.
Experts said this upward trend is likely to continue for the time being. Citigroup predicted in a recent report that within the next three months gold will top $5,000 per ounce and silver will surpass $100.
Danni Hewson, a financial analyst at AJ Bell, told the BBC, "Fear that the hard-won trade deal between Europe and the United States could fall apart is dominating the market," warning, "With the U.S. Supreme Court set to rule on whether President Trump abused his authority to impose tariffs, another bout of major turmoil could be coming."