The yellow metal is trading higher than 2%, while silver is rising more than 3% at the start of European trading on Wednesday, January 21st. This comes amid escalating geopolitical tensions and a war of words between the US president and EU leaders on the sidelines of the Davos conference, coupled with widespread selling of US assets and a decline in Japanese government debt. Expectations of capital inflows to Japan have risen as yields climb. Gold is trading up approximately 2.03% at $4,860 per ounce, while silver is trading at $95.16 per ounce, up 1.61%.

The US president confirmed his refusal to back down from his plan to annex Greenland on the sidelines of the Davos conference, thus increasing demand for safe-haven assets. This came after he announced earlier that his country would impose new tariffs on Denmark, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland, starting at 10% in early February and rising to 25% in June until an agreement is reached to purchase Greenland entirely. Meanwhile, the Prime Minister of Greenland warned residents of a possible military invasion.

In response, statements by French President Emmanuel Macron and Canadian Prime Minister Mark Carney further heightened tensions with the United States, expressing clear opposition to Trump’s plan to annex Greenland on the sidelines of the Davos summit. This led to increased volatility in financial markets and a surge in demand for safe-haven assets, particularly gold.

Rising borrowing costs in Japan have contributed to a decline in risk appetite in financial markets and boosted demand for safe-haven assets. Yields on 10-year Japanese government bonds rose at their fastest pace since 2022, while 30-year yields climbed at their fastest rate since 2003. This surge is attributed to the prospect of increased government spending following Prime Minister Sane Takaichi’s call for early elections earlier this week, which has fueled expectations of capital inflows back into Japan.

Regarding central bank purchases and institutional demand for gold, the National Bank of Poland is preparing to buy 150 tons of gold, according to the latest reports. This will bring its total gold reserves to 700 tons, placing it tenth globally in terms of gold reserves.

Platinum is trading at $2,459, up 0.14%, after reaching a record high of $2,511 earlier in the day. Palladium is also rising, by approximately 0.02%, trading at $1,865.