Why Gold and Silver are exploding higher on Trump’s Greenland gambit

Gold and Silver surged to fresh record highs in early Asian trading as markets digested a dramatic escalation in geopolitical risk from Washington. US President Donald Trump’s announcement of sweeping tariffs on European allies over Greenland jolted investors, triggering a rush into safe-haven assets and unsettling global equities.

The moves had little to do with inflation or rate cuts. Instead, it reflects growing unease over trade fragmentation, diplomatic breakdowns, and the weaponisation of tariffs as a form of geopolitical leverage. As tensions spill across the Atlantic, gold and silver are once again behaving like political barometers rather than inflation hedges.

What’s driving Gold and Silver higher?

The immediate catalyst for gold’s explosive move is Trump’s threat to impose 10% tariffs from 1 February, rising to 25% by June, on eight European countries unless the US is allowed to purchase Greenland. The nations targeted include Germany, France, Denmark, the UK, Sweden, Norway, Finland, and the Netherlands - all long-standing US allies.

Markets reacted not just to the tariffs themselves, but to the precedent they set. Linking trade policy directly to territorial demands represents a sharp escalation in economic coercion. Investors quickly priced in the risk of retaliation, policy paralysis, and prolonged uncertainty, conditions under which gold historically thrives. European officials warned that the move risks a “dangerous downward spiral” in transatlantic relations, reinforcing the sense that diplomacy may struggle to contain the fallout.

Silver has followed gold higher, though with more volatility. While gold benefits almost immediately from fear-driven flows, silver’s response reflects a mix of safe-haven demand and concern over industrial disruption. 

With European leaders openly discussing retaliatory measures on as much as €93 billion of US goods, fears of fractured supply chains and slower manufacturing activity are beginning to underpin silver prices as well.

Why it matters

This rally matters because it signals a shift in the drivers of precious metals. Recent gold strength has persisted despite strong US labour market data and fading expectations of near-term Federal Reserve rate cuts. Futures markets now price the next Fed easing no earlier than June, yet gold continues to push higher.

That divergence highlights a deeper concern. Investors are no longer focused solely on interest rates or inflation trajectories. Instead, they are reacting to political risk that cannot be easily modelled or hedged. 

As Saxo Markets’ chief investment strategist, Charu Chanana, put it, the key question is whether this moves “from rhetoric to policy”, because once deadlines are set, markets must treat the threat as real.

Impact on markets, trade, and investors

The broader market reaction has been swift. European and US equity futures fell, while the US dollar weakened against the euro, sterling, and yen. That softer dollar removed a traditional headwind for gold, amplifying its upside momentum. 

Importantly, this is occurring even as US bond yields remain elevated, reinforcing that the move is driven by risk aversion rather than monetary easing.

Silver’s role is more complex. If trade tensions escalate without tipping the global economy into recession, silver could outperform gold due to tighter supply conditions and its exposure to strategic industries. However, should tariffs meaningfully slow industrial output, silver may face sharper pullbacks on negative growth headlines. That dual exposure explains the increased volatility now visible in silver markets.

For investors, the message is clear. Precious metals are once again being treated as portfolio insurance. ETF inflows and derivatives positioning suggest institutional demand is accelerating, even as physical consumption remains secondary. The focus is on capital preservation, not jewellery or industrial usage.

Expert outlook

Looking ahead, the near-term trajectory for gold hinges on whether Trump’s tariff threats are implemented or diluted through negotiation. 1 February has become a critical date for markets. Confirmation of policy action could push gold deeper into uncharted territory, with some bank analysts already outlining scenarios above $4,800 per ounce if retaliation follows.

Silver’s outlook depends on how trade tensions intersect with economic resilience. Persistent geopolitical stress combined with steady growth would favour silver on a relative basis. A sharp deterioration in trade flows, however, would likely see gold widen its lead. Investors are also watching EU discussions around activating the bloc’s anti-coercion instrument, a rarely used tool that could significantly escalate the dispute.

Key takeaway

Gold’s record-breaking surge is a response to political shock, not economic weakness. Trump’s Greenland-linked tariff threats have revived trade war fears and pushed investors toward hard assets. Silver is participating, though with greater sensitivity to growth risks. Whether this rally extends now depends on one question: will these threats translate into policy, or will diplomacy regain control?

Silver technical outlook

Silver has surged to around $93, marking a near-38.7% gain in just 30 days, with trading volume estimated at roughly 15 times normal levels - one of the most aggressive silver rallies seen in decades. The move places silver firmly in price-extension territory, with technical conditions more commonly associated with late-stage or blow-off phases. Gold has also pushed sharply higher, reinforcing the broader precious-metals momentum backdrop.

Trend strength remains undeniable. ADX readings near 52 point to a very strong, mature trend, while momentum indicators are stretched across timeframes: RSI is above 70 on the daily chart, near 86 on the weekly, and above 90 on the monthly. This combination reflects powerful upside momentum, but also highlights growing exhaustion risk as the rally matures.

Price continues to track along the upper Bollinger Band with expanding volatility - a classic parabolic profile. At the same time, the nearest structurally meaningful support sits near $73, more than 20% below current levels, underscoring just how stretched the move has become. Historically, when ADX reaches these extremes, any loss of momentum tends to be followed by sharp, fast pullbacks rather than shallow consolidations.

Gold technical outlook

Gold continues to trade near recent highs after a strong upside extension, with price pressing against the upper Bollinger Band - a sign of sustained bullish momentum but also elevated short-term stretch. Volatility remains expanded, reflecting strong participation rather than a low-conviction drift. 

Momentum indicators show similar conditions: the RSI is rising gradually toward overbought territory, suggesting momentum is firm but no longer accelerating aggressively. Structurally, the broader trend remains intact, while price holds above the $4,035 and $3,935 zones, with recent price action pointing to consolidation rather than an immediate trend reversal.