Gold prices surged to a fresh record above US$4,850 per ounce on Wednesday, supported by strong safe-haven demand and a weaker United States dollar as President Donald Trump’s pursuit of Greenland threatened to reignite a trade war with Europe and strain the NATO alliance.
By 3:30 pm AEDT (4:30 am GMT) spot gold rose 1.8% to fresh record highs of US$4,851.40 per ounce. The precious metal has benefitted from rising geopolitical uncertainty and a broad retreat in risk assets.
Spot silver, by contrast, slipped 0.4% to $94.07 an ounce, retreating from Tuesday’s record high of $95.87.
According to a BBC report on Wednesday, the European Parliament is planning to suspend approval of a U.S. trade deal agreed in July, citing sources close to its international trade committee.
The suspension is expected to be announced in Strasbourg later on Wednesday.
Heightened tensions between the U.S. and Europe are likely to underpin demand for traditional safe-haven assets in the near term, particularly gold.
On Tuesday, Trump said there was “no going back” on his goal to control Greenland, refusing to rule out the use of force and sharply criticising NATO allies.
He later struck a more conciliatory tone, saying, “We will work something out where NATO is going to be very happy and where we're going to be very happy.”
ANZ analysts commented in a note to clients: "Danish Prime Minster, Jens-Frederik Nielsen, said Greenland should start preparing for a possible invasion.
"President Trump has continued to threaten taking over the territory on national security grounds. Earlier in the day, he posted an AI-generated image of himself planting a US flag on the island.
“The U.S. threat towards its NATO allies has rattled markets, adding new impetus to a record-breaking rally that has seen gold hitting record highs.”
European leaders have pushed back strongly. French President Emmanuel Macron said Europe would not give in to bullies or be intimidated, delivering a sharp rebuke of Trump’s threat to impose steep tariffs at the World Economic Forum in Davos if Europe refuses to acquiesce over Greenland.
Meanwhile, the U.S. dollar hovered near three-week lows, helping to support precious metals prices, while Asian sharemarkets extended losses for a third straight session.
A weaker dollar typically boosts demand for greenback-priced commodities by making them cheaper for overseas buyers, adding further support to gold’s historic rally.
