Gold jumped above $4,700 an ounce for the first time on Tuesday, after U.S. President Donald Trump’s threats to impose additional tariffs on European allies dampened global market sentiment and triggered a strong rush toward safe-haven assets.
Gold rose 0.7% in spot trading to $4,699.93 an ounce, after hitting an all-time high of $4,701.23 earlier in the session.
US gold futures for February delivery also rose 2.4% to $4,706.50 an ounce.
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Greenland tensions and US politics fuel appetite for minerals
Trump has stepped up his efforts to wrest sovereignty over Greenland from Denmark, a NATO ally, prompting the European Union to consider countermeasures.
Tim Waterer, chief market analyst at KCM Trade, said that Trump’s confusing approach to foreign policy and his desire to see lower interest rates create an ideal environment for precious metals to rise, as reflected in the strong jumps in gold and silver prices.
He added that Trump’s second term so far has been a clear supporter of precious metals, as his unconventional style of policy management directly benefits gold and silver as safe havens.
Historic gains and support amid concerns about federal independence
Gold prices have risen by more than 70% since the start of Trump’s second term a year ago, in a surge that reflects growing political and monetary anxiety globally.
Gold found additional support on Tuesday as concerns persisted about the independence of the Federal Reserve, with the U.S. Supreme Court expected to consider this week a case concerning Trump's attempt to fire Federal Reserve member Lisa Cook.
The Federal Reserve is widely expected to keep interest rates unchanged at its meeting on January 27 and 28, despite Trump's repeated calls for a rate cut. Gold is known to perform strongly during periods of low interest rates because it is a non-yielding asset.
Expectations of an interest rate cut and mixed performance for other metals
Kelvin Wong, senior market analyst at OANDA, believes the Federal Reserve could continue its interest rate-cutting cycle until 2026, citing a weak labor market and waning consumer confidence, with markets currently pricing in a cut coming in June or July rather than sooner.
As for the rest of the precious metals, platinum fell in spot trading by 0.8% to $2,355.60 an ounce.
Palladium also fell 0.7% to $1,828.58 an ounce, as attention remains primarily focused on the exceptional momentum in gold and silver.
