Global trade war fears hammer global stocks, send gold to record high

World stock markets lost ground on Tuesday, while precious metals hit fresh peaks amid fears of a US-EU trade war fueled by Donald Trump’s tariff threat over opposition to his ambitions to acquire Greenland, which has stoked volatility.

Wall Street opened sharply lower as the tech-heavy Nasdaq gave up 1.7 percent minutes into the session, while the Dow and the broader-based S&P 500 shed 1.4 percent as traders began the week’s US trading, following Monday’s Martin Luther King holiday.

Europe’s main markets also lost more than one per cent during the day’s trading, while Tokyo suffered a similar fate earlier, despite Asia overall closing mixed.

Gold, seen as a safe-haven investment, notched yet another record high, closing in on the $4,740 an ounce mark. Silver also peaked, touching $95.51 an ounce.

Key bond yields jumped on the heightened trade fears, with the US 10-year Treasury note jumping around seven basis points to 4.29 percent while Japanese long-dated bond yields reached record highs.

Kathleen Brooks, research director at XTB, noted that banks and US tech “are at risk from EU tariffs” in response to Trump’s tariff blitz and warned this would hurt US blue chips.

Tesla, Amazon and Nvidia were all showing losses of around 2.5 percent in early New York trading.

“Overall, this is a manmade crisis, and the continued sell-off on Tuesday suggests that US threats to Greenland and their effects on financial markets could have further to go if the situation does not de-escalate soon,” Brooks opined.

“The US dollar is not serving as a safe haven because it seems to be entirely US-driven and raises fears about US policy and European exposure to US assets,” noted Neil Wilson, investor strategist at Saxo UK.

After a bright start to the year fuelled by fresh hopes for the artificial intelligence sector, investors have taken fright since Trump ramped up his Greenland demands, on grounds of US “national security”.