Gold rises to record high and stocks fall as Trump travels to Davos
Published on
Gold soared to another record high on Wednesday, surpassing $4,800 per ounce, as leaders in Davos await the arrival of US President Donald Trump at the Swiss summit.
While the EU and US continue to clash over Trump’s plans to acquire Greenland, the precious metal has risen over 2% — with investors looking for a safe place to park their money amid renewed tariff threats. Silver prices, meanwhile, notched up 0.44% to $95.055.
“You’ll have to find out,” Trump said on Tuesday when asked how far he was willing to go to acquire Greenland. The US has failed to rule out military intervention, and is proposing extra tariffs on eight European countries if they fail to comply with his demands over the island.
After a record-breaking 2025, analysts remain optimistic about gold’s trajectory for 2026 as US interest rates fall, the dollar weakens, and central banks continue to add to their gold reserves.
When the greenback falls in value, this makes gold comparatively cheaper for foreign buyers and therefore drives up demand and prices.
Low US interest rates also increase gold’s appeal compared to interest-bearing assets, as investors aren’t significantly losing out if they choose the metal over assets like bonds.
Dollar dominance
Investors are betting that the next Federal Reserve chair, who will replace Jerome Powell when his term ends in May, will be more dovish than his predecessor — meaning they will be more focused on lowering interest rates than taming inflation risks.
The candidate will be nominated by President Trump, who has heavily criticised Powell for his cautious approach to policy easing over the last year.
Although central banks have been reducing their dependency on the dollar in favour of gold, experts stress that the greenback will not be usurped as the world’s reserve currency anytime soon, with the currency still making up roughly 57% of total central bank reserves. Even so, the greenback could see a gradual erosion of its status if US policy decisions continue to undermine its stability.
“We are taking the view that the dollar has some room to recover today,” said ING analysts in a note on Wednesday. They emphasised that a decline in the dollar a day earlier was linked to instability in the Japanese bond market, as well as fears that Europeans might start selling their 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,” said ING analysts.
The Dollar Index, which tracks the greenback against six other currencies, traded less than 0.1% higher on Wednesday after falling on Tuesday.
Turning to stocks, Europe’s major indexes again found themselves in the red on Wednesday after two days of losses.
France’s CAC 40 had dropped 0.18% by around 11:30 CET, Germany’s DAX was down 0.68%, and Spain’s IBEX 35 lost 0.53%. Italy’s FTSE MIB was down 0.68%, the UK’s FTSE 100 slid less than 0.1%, while the broader STOXX Europe 500 tumbled 0.35%.
Ahead of the opening bell in the US, S&P 500 futures rose 0.34%, Dow Jones futures jumped 0.13%, and Nasdaq futures increased 0.19%.