(Jan 21): Gold and platinum rose to fresh records — while silver was near an all-time peak — as the worsening crisis over Greenland and a meltdown in Japanese government debt supported haven demand.
President Donald Trump, who is in Switzerland for the World Economic Forum at Davos, showed no signs of backing down on his Greenland grab. That prompted the Arctic island’s prime minister to warn the population of a possible military invasion, though he added it was an unlikely scenario.
Spot gold rallied to a record of US$4,844.10 an ounce, while platinum surged to an all-time high of US$2,511.10 an ounce before giving up its early gains to trade little changed. Silver was above US$94.
The US has threatened tariffs on eight European nations — including Germany, France and the UK — that have opposed Trump’s plan to take over Greenland, raising the specter of a damaging trade war. French President Emmanuel Macron attacked Trump’s trade tactics, saying Europe needed more sovereignty to avoid “vassalisation and blood politics”, while Canadian Prime Minister Mark Carney said the rules-based international order was effectively dead.
The war of words in Davos underscored how quickly the relationship between traditional allies the US and Europe has deteriorated, rattling financial markets, pushing down the dollar and boosting demand for havens like precious metals.
See also: Gold extends powerful rally as crisis over Greenland worsens
Separately, a meltdown in the Japanese sovereign debt market highlighted worries about the fiscal situations of major economies, a phenomenon that’s fueled the so-called debasement trade where investors avoid currencies and government bonds.
The situation in Japan is spurring “fear of market-led debasement in the rest of the world”, Daniel Ghali, a senior commodity strategist at TD Securities, said in a note. “Gold’s rally is about trust. For now, trust has bent, but hasn’t broken. If it breaks, momentum will persist for longer.”
Spot gold was 1.4% higher at US$4,829.98 an ounce as of 10.10am in Singapore, while platinum dipped 0.5% to US$2,463.20 after surging as much as 1.5% earlier. The Bloomberg Dollar Spot Index lost 0.1% after falling 0.5% over the previous two sessions.
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