Trade War Reignited: Gold Smashes $4,700 as Trump Leverages Tariffs in Greenland Bid

Global financial markets have entered a state of heightened volatility as the Trump administration forcefully revived its bid to acquire Greenland, utilizing aggressive tariff threats against key NATO allies as leverage. The geopolitical standoff has triggered a flight to safety, propelling Spot Gold (XAU/USD) to a historic high above $4,717, while Silver (XAG/USD) briefly tested the $100 mark before retracing.

Tariff Escalation: The 'Art of the Deal' or Economic Warfare?

The White House has issued an ultimatum to Denmark, the UK, France, Germany, and other European nations: facilitate the transfer of Greenland to US control or face a 10% tariff on all exports to the US starting February 1, escalating to 25% by June 1.

Compounding tensions, President Trump threatened a 200% tariff on French wine and champagne after French President Emmanuel Macron reportedly refused to join a US-led “Peace Committee”—a body requiring a $1 billion entry fee to oversee post-war governance in Gaza.

European leaders have signaled a unified, hardline response. The European Union is drafting widespread retaliatory measures targeting €93 billion in US goods, potentially invoking its anti-coercion instrument.

Market Reaction: The Safe-Haven Rush

The threat of a fractured transatlantic trade relationship has decimated risk appetite:

• Gold: Surged past $4,700/oz as investors hedge against currency debasement and stagflation risks.
• Bond Markets: A global sell-off is underway. US 10-year yields rose on fears that tariffs will reignite inflation, while European nations holding over $10 trillion in US assets could potentially weaponize capital flows in retaliation.
• Currencies: The USD is seeing mixed flows—supported by higher yields but weighed down by de-dollarization fears. The Swiss Franc (CHF) and Gold remain the primary beneficiaries.

Analyst View: Negotiation or Crisis?

Despite the bellicose rhetoric, Wall Street remains divided. JPMorgan analysts suggest the threats are a classic negotiation tactic—“The Art of the Deal”—aimed at forcing concessions rather than a genuine desire to dismantle NATO trade structures. The bank predicts a “negotiated arrangement” involving expanded US military and economic rights in Greenland rather than an outright sovereignty transfer, potentially cooling markets before the February deadline.

However, the Bank of America and Deutsche Bank warn of “capital weaponization,” noting that if EU nations liquidate US Treasuries to offset economic damage, the liquidity crisis could spill over into broader equity markets.