Gold Hits Fresh Record as Markets Slide Ahead of Trump’s Davos Appearance

Gold climbed to a new all-time high on Wednesday, while global equity markets retreated, as investors reacted to escalating geopolitical tensions and awaited the arrival of US President Donald Trump at the World Economic Forum in Davos.

Precious metals advanced, stocks weakened, and concerns over the US dollar resurfaced amid a deepening dispute between the United States and the European Union over Greenland.

The price of gold surged past $4,800 per ounce, marking another record as global leaders gathered in Switzerland in anticipation of Trump’s appearance at the summit. The metal has gained more than 2% during the latest rally, as investors sought safe-haven assets in response to renewed tariff threats and geopolitical uncertainty. Silver also moved higher, rising 0.44% to $95.055.

Tensions between Washington and Brussels have intensified over Trump’s stated intention to acquire Greenland. When asked on Tuesday how far he was prepared to go to secure the island, Trump replied, “You’ll have to find out.” The US has not ruled out military action and has proposed imposing additional tariffs on eight European countries should they refuse to comply with his demands related to Greenland.

Following a record-setting year in 2025, analysts remain bullish on gold’s outlook for 2026.

Expectations of falling US interest rates, a weakening dollar, and continued gold purchases by central banks are all seen as supportive factors. When the dollar loses value, gold becomes cheaper for buyers using other currencies, boosting demand and pushing prices higher.

Lower US interest rates have also enhanced gold’s appeal relative to yield-bearing assets. With returns on instruments such as bonds declining, investors face a smaller opportunity cost when allocating funds to gold instead.

Speculation surrounding the future leadership of the Federal Reserve has further influenced currency markets. Investors are increasingly betting that the next Fed chair, who will succeed Jerome Powell when his term ends in May, will adopt a more dovish stance, prioritising interest rate cuts over inflation control. The nominee will be selected by President Trump, who has repeatedly criticised Powell for what he views as an overly cautious approach to monetary easing over the past year.

Despite a gradual shift by central banks away from the dollar and toward gold, analysts caution that the greenback is unlikely to lose its status as the world’s dominant reserve currency in the near future. The dollar still accounts for approximately 57% of global central bank reserves. However, experts note that continued policy uncertainty in the US could slowly erode confidence in the currency over time.

“We are taking the view that the dollar has some room to recover today,” ING analysts said in a note on Wednesday. They explained that the dollar’s decline a day earlier was driven by volatility in the Japanese bond market, as well as concerns that European investors might begin offloading US Treasury holdings.

“Japanese bonds have rebounded… and with Trump headed to Davos, we see some scope for de-escalation on the Greenland risk and fears of European dumping of US assets,” the ING analysts added.

The Dollar Index, which measures the US currency against six major peers, edged less than 0.1% higher on Wednesday after posting losses on Tuesday.

Equity markets, meanwhile, continued to struggle. Major European stock indexes remained under pressure for a third consecutive session. By around 11:30 CET, France’s CAC 40 was down 0.18%, Germany’s DAX had fallen 0.68%, and Spain’s IBEX 35 was lower by 0.53%. Italy’s FTSE MIB slipped 0.68%, the UK’s FTSE 100 declined by less than 0.1%, and the broader STOXX Europe 500 dropped 0.35%.

In contrast, US equity futures pointed to a modestly stronger open on Wall Street. Ahead of the opening bell, S&P 500 futures were up 0.34%, Dow Jones futures gained 0.13%, and Nasdaq futures rose 0.19%.

By fLEXI tEAM