Gold Shatters Records as US-EU 'Greenland' Rift Rattles Markets

XAU/USD surged to unprecedented highs on Tuesday, breaking the $4,720 barrier as a diplomatic spat between the United States and the European Union over the status of Greenland morphed into a credible threat to global trade stability. The precious metal's rally was mirrored by Silver (XAG/USD), which climbed over 1% to $95.45, driven by a resurgence in “debasement trades” and acute geopolitical risk aversion.

Key Market Data

• Gold (XAU/USD): Broke major resistance at $4,720.
• Silver (XAG/USD): Rallied over 1% to hit $95.45.
• EUR/USD: Rebounded into the 1.16–1.17 range due to broad Dollar weakness.
• Copper: Rebounded toward $13,000, supported by Chinese growth targets.

Trade Tensions Escalate

The catalyst for the move is the intensifying friction regarding the Trump administration's renewed interest in acquiring Greenland, a move that has drawn sharp rebukes from European leaders. Market anxiety heightened following reports that the EU might considering retaliatory measures, sparking fears of a new trade war.

In Davos, US Treasury Secretary Scott Bessent attempted to execute damage control, dismissing rumors that European allies might liquidate US Treasury holdings as “nonsense” and urging adherence to existing trade agreements. Despite his comments, the broader “risk-off” sentiment prevailed, pushing investors toward hard assets and weighing on the Greenback against the Euro, with EUR/USD rebounding into the 1.16–1.17 range.

Analyst View: Debasement or Geopolitics?

While the immediate trigger is geopolitical, the underlying support for precious metals appears structural. The confluence of fiscal expansion fears and trade fragmentation is forcing capital into non-sovereign stores of value. If the EU-US rift deepens, the traditional inverse correlation between the Dollar and Gold may continue to decouple, with both potentially rising against weaker cyclical currencies, though the Dollar softened slightly in Tuesday's session.

ING commodities strategists noted that Copper also rebounded toward $13,000, aided by Dollar weakness and Chinese growth targets, suggesting that the commodity rally is broad-based rather than solely fear-driven.