Precious metal markets experienced extraordinary sessions on Monday, with both gold and silver achieving unprecedented price levels as geopolitical tensions intensified. Silver led the charge with a spectacular rally to $94.08 per ounce—an all-time record—before moderating to $93.15, still representing a robust 3.6% daily gain. Gold demonstrated similar strength, touching a historic high of $4,689 per ounce and closing at $4,671 with a 1.6% advance as investors sought protection from mounting uncertainty.
The source of market disruption traced directly to President Trump’s weekend declaration threatening major tariff increases on eight European countries unless the United States gains the ability to purchase Greenland. The proposed tariff timeline establishes February 1st as the starting point for 10% levies on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, with automatic increases to 25% scheduled for June 1st absent a territorial transfer agreement. This novel connection between trade policy and territorial ambitions represents unprecedented territory in modern international economic relations.
European equity markets responded with significant declines across the board, led by France’s 1.8% drop in the Cac index, while German and Italian markets each fell 1.3%. The UK’s FTSE 100 demonstrated relative resilience with a more modest 0.4% decline. Automotive manufacturers faced particularly acute selling pressure, with major German brands including Volkswagen, BMW, and Mercedes-Benz all shedding more than 2% of their value, while Stellantis similarly declined nearly 2%. American technology companies listed on European exchanges also experienced losses despite US markets remaining closed for holiday observance.
Market participants have developed a theoretical framework they’ve termed “Taco”—an acronym suggesting Trump typically moderates tariff threats through subsequent negotiation—based on historical patterns of trade policy announcements followed by diplomatic de-escalation. This observation has provided markets with comfort during previous trade disputes. However, financial experts emphasize that the current situation’s unique characteristics, particularly the territorial acquisition component, may prevent resolution through standard trade negotiation approaches typically employed in commercial disputes.
Economic forecasters project measurable consequences for European growth trajectories, with estimates suggesting 0.2 percentage point reductions in GDP expansion due to potential tariff implementation. The United Kingdom faces potentially more severe impacts, with economic modeling indicating possible GDP contractions between 0.3% and 0.75%, sufficient in worst-case scenarios to trigger recessionary conditions. Meanwhile, trade policy analysts note that the European Union’s single market framework may offer businesses opportunities to circumvent targeted tariffs through strategic routing between member states, potentially reducing the intended policy impact while simultaneously complicating diplomatic relations and sustaining elevated demand for precious metals as geopolitical hedges.