Gold and silver prices hit record highs but stock prices fell on Monday as investors reacted to US President Donald Trump’s threat to impose new tariffs on eight European countries in protest over his proposed annexation of Greenland.
On Monday, gold prices hit $4,689.39 (£3,499) an ounce, while silver rose to a peak of $94.08 an ounce.
Precious metals are seen as safe haven assets in times of uncertainty, and the prices of both gold and silver have risen over the past year.
But stock markets in Europe fell as investors were worried about the latest increase in geopolitical tensions.
On Saturday, Trump announced 10% tariffs on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland, which will take effect Feb. 1 but could later rise to 25% — and will last until an agreement is reached on Greenland.
Reports suggest the EU is considering responding with a €93bn (£80bn) package of tariffs on US imports.
Concerns over the Greenland dispute led to another rise in gold and silver prices as investors turned to “safe haven” assets.
Last year, the price of gold rose by more than 60% due to concerns about global tensions and economic uncertainty.
However, there are other factors behind the rise, including expectations of more interest rate cuts, central banks adding hundreds of tonnes of gold to their reserves and – with respect to silver – China announcing a ban on exports of the metal.
“Gold has hit new record highs with its shine,” said Susannah Streeter, chief investment strategist at the Wealth Club.
“The precious metal holds even more attraction as a safe haven as concerns spread about the consequences of US aggressive trade and geopolitical policies.”
But while gold and silver continued their recent strong performance, stocks were on the backfoot.
London’s FTSE 100 index fell 0.4%, while the FTSE 250 – which has a higher number of domestically concentrated companies – was down 0.8%. Financial companies and industrial stocks were mixed lower, but shares of gold miners Fresnillo and Endeavor rose after the latest rise in precious metals prices.
Shares of carmakers, technology and luxury goods companies across Europe fell sharply.
In Germany, the DAX index fell 1%, while car companies BMW, Mercedes-Benz and VW all declined about 3-4%.
In France, the CAC 40 index was down 1.4%, with luxury brands LVMH and Hermes the biggest losers.
However, European defense stocks rose, with Germany’s Rhinemetal and France’s Thales both trading higher.
Markets in America are closed on Monday due to public holiday.
Dan Coatsworth, head of markets at AJ Bell, said Trump’s latest tariff threat “turns the heat up to max”.
However, he added that “although we have seen a red day for European stocks in general, this is not the time to panic”.
“There is a need to keep a close eye on how markets behave in the near term. A decline of 1% to 1.5% every day over a series of a few weeks is troublesome, and investors want to avoid that happening.”
According to the latest forecast of the International Monetary Fund (IMF), trade tensions are one of the main risks to global economic growth.
In its latest World Economic Outlook – prepared before the latest tariff threat emerged – it described the global economy as “stable” but said risks to growth included the end of the AI boom and a “flare-up” in trade tensions.