Gold climbed above $4,800 for the first time as investors continue to flood into the safe-haven asset amid geopolitical instability.
US president Donald Trump’s dogged stance on owning Greenland has caused much consternation, with concerns that invading a fellow NATO country would bring down the Western alliance.
Neil Wilson, UK Investor Strategist at Saxo, said the president is ratcheting up the pressure to get ownership of the country, which is part of the Kingdom of Denmark.
The president has said “there can be no going back”, adding that he will hold a meeting in Davos with “various parties” to discuss Greenland after a “very good” call with NATO secretary-general Mark Rutte.
“Although we are seeing some notably sharp moves in the market, the expectation and hope is that a deal is done. Otherwise, we're in uncharted waters and we see some much bigger swings,” said Wilson.
“The key is whether a) Trump is bluffing as per the usual TACO/art of the deal, b) Europe can call the bluff without escalating too much first. If he's really deadly serious about acquiring the island as part of the USA come what may, then things get real ugly from here.”
Susannah Streeter, chief investment strategist at Wealth Club, said: “It’s not surprising that investors are unnerved and are increasingly seeking out safer havens for their money, less reliant on the trajectory of the US economy.
At times of uncertainty, gold tends to be one of the preferred methods for investors to shelter their cash.
“The pile-on into gold is continuing, as it again hits fresh records. For now, it seems the only way is up for the precious metal, as unease continues spread about the potential for fresh geopolitical turmoil and a wider trade war,” she added.
Gold spot price
Source: The Royal Mint
Chris Beauchamp, chief market analyst UK at IG, noted the precious metal has hit six new record highs so far this year, demonstrating that it is “often futile” to call the top.
“Just when the bounce seemed to have run out of catalysts, up pops Trump to reignite the trade war, threatening to bring down NATO in the process, and sending the dollar into freefall,” he said.
“It's not all down to the Greenland saga, however – Poland's central bank is on course to bolster its gold reserves, reminding markets that this isn't just a momentum-fuelled, 'sell the US', frenzy in precious metals."