Key events
Introduction: Gold soars past $5,100 an ounce, silver hits new record on tariff and US shutdown fears
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Gold has soared past $5,100 an ounce, as investors pile into safe-haven assets amid Donald Trump’s threat of new tariffs on Canada and fears of another government shutdown in the US.
Trump threatened Canada with 100% tariffs if America’s northern neighbour “makes a deal with China”, and after the US president’s dramatic showdown with Europe over the future of Greenland.
There is also a risk that the US government could shut down for the second time in months, after Democrats threatened funding for the Department of Homeland Security in the wake of the weekend shooting of a man in Minneapolis by federal immigration agents.
Spot gold climbed 2.2% to touch a new all-time high of $5,110.50 an ounce. It gained 64% in value last year, its biggest annual increase since 1979. A weaker dollar and interest rate cuts have added to gold’s appeal, and it has also been boosted by central bank buying and record inflows into exchange-traded funds.
So far this year, the gold price has risen by about 17%.
Silver prices also continue to go up after rising through $100 an ounce on Friday. Spot silver climbed 4.5% to $107.6 an ounce, after hitting a record of $109.44.
Ipek Ozkardeskaya, senior analyst at Swissquote, said:
What’s striking is that this renewed flight to safe havens is unfolding without any major geopolitical headline this morning. There has been no new escalation over the weekend — no fresh breach of international law, no invasion, no immediate military threat. The US did, however, threaten Canada with 100% tariffs, after Mark Carney approached China last week, defying the White House — a reminder that trade tensions remain alive and well. Beyond that, the news flow is thin. Yet the bid for precious metals suggests that market stress is far from over.
She added:
Last week was marked by the escalation — and partial de-escalation — of geopolitical and trade tensions between the US and the EU, Macron’s now-famous glasses that grabbed headlines at the World Economic Forum, and renewed stress around Japan’s swelling public debt. The latter triggered a sharp sell-off in Japanese government bonds, pushing some long-dated JGB yields to multi-decade — and in some cases record — highs.
The yen spiked on Friday and has risen by 1% to 154.06 per dollar today, sparking speculation over potential intervention. The New York Federal Reserve conducted rate checks on Friday, Reuters reported citing sources, raising the chance of joint US-Japanese intervention.
Since Sanae Takaichi became Japan’s prime minister in October, there have been fears that her fiscal spending plans and tax cuts could worsen the country’s debt burden, which is more than double its economic output. She has called a snap election for 8 February.
The Japanese stock market fell by 1.79% on today, while South Korea’s Kospi was down 0.8%.
The Agenda
