Gold and silver prices hit all-time highs, but stock prices fell on Monday because investors were reacting to US President Donald Trump’s threat to put new taxes on eight European countries that are against his plan to take over Greenland.
Gold hit a high point of $4,689.39 (£3,499) an ounce on Monday, while silver hit a high point of $94.08 an ounce.
Gold and silver prices have gone through the roof in the past year because people think they are better investments to make when things are uncertain.
But European stock markets went down because buyers were worried about the latest rise in geopolitical tensions.
Trump said on Saturday that starting on February 1, 10% of goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland would be taxed. This rate could go up to 25% later, but for now it will stay at 10% until a deal is made on Greenland.
Reports say the EU is thinking about putting a €93bn (£80bn) package of tariffs on US goods as a response.
As investors looked for “safe haven” investments because of the fight in Greenland, the prices of gold and silver went up again.
More than 60% of the price of gold went up last year. This was partly because of worries about economic and global strife.
The rise is due to a number of things, such as the belief that interest rates will be lowered even further, central banks adding hundreds of tonnes of gold to their reserves, and China limiting the export of silver.The chief financial strategist at Wealth Club, Susannah Streeter, said, “Gold has hit new record highs on its glittering rise.”As fears grow about the effects of the US’s harsh trade and geopolitical policies, the precious gold becomes an even more appealing safe haven.
The price of gold and silver, on the other hand, kept going up, while shares were going down.
The FTSE 100 index in London ended the day down almost 0.4%, and the FTSE 250 index, which has more companies based in the UK, ended the day down 0.9%. A mix of banking and industrial stocks went down, but shares in gold miners Fresnillo and Endeavour went up after the latest rise in the price of precious metals.
Europe as a whole saw big drops in the value of shares in tech, luxury goods, and car companies.
It went down 1.3% in Germany, and car companies like BMW, Mercedes-Benz, and VW all went down by about 2% to 3%.
It was down 1.8% in France, and high-end names like LVMH and Hermes were among those that lost money.
But European defence stocks went up. Rheinmetall in Germany and Thales in France were both trading higher.
The US market is closed on Monday because it is a holiday.European stock markets fell sharply because people thought that a hard-fought trade deal between Europe and the US might not happen after all. “This was caused by fears that the trade deal might not happen,” said Danni Hewson, head of financial research at AJ Bell.
But the US Supreme Court is going to decide soon on whether President Trump went too far when he used the International Emergency Economic Powers Act to put tariffs in place. The decision could come as soon as Tuesday.
It “could bring another huge upset” if the court threw out Trump’s tariffs, Hewson said.
The International Monetary Fund (IMF) says that trade conflicts are one of the biggest threats to the growth of the world economy.
It says that the global economy is “steady” in its most recent world economic outlook, which was written before the latest tariff threat. However, it also says that a “flare up” in trade issues and the end of the AI boom are two things that could hurt growth.
