Safe-haven buying has driven precious metals soaring, with gold and silver prices both hitting record highs

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The uncertainty of the easy policy has heated up again, and the market risk aversion has spread rapidly. In the face of the current situation, funds have flooded into the precious metals market, driving the prices of gold and silver to set new historical highs simultaneously.BCR ForexAnalysts pointed out that the strong performance of precious metals reflects investors' growing concerns about the global economic and trade outlook.

Over the weekend, new tariff threats were issued, affecting several European economies, and the level of tax rates attracted wide attention. The move was aimed at pressuring some trading partners to gain a greater say in the negotiation of resource rights. After the news was released, European legislatures quickly responded by announcing that the approval process of some previously agreed trade agreements was suspended, and hinted at the possibility of reciprocal countermeasures.

The resurgence of trade frictions put pressure on the dollar, further boosting precious metals prices. Spot gold was reported at $4,674.58 an ounce, up 1.72% in the day; spot silver was reported at $93.814 an ounce, up 4.19% in the day.

Lin Chen, senior market analyst at BCR FX, said: "Gold's sharp reaction to the tariff-related news highlights a shift in sentiment away from focusing solely on economic growth or inflation and towards viewing policy uncertainty as the core factor dominating the market. Tariffs not only disrupt trade flows, but could also have spillover risks to supply chains, corporate margins and medium-term growth expectations. Once the probability of escalation rises, defensive funds tend to pre-empt rather than wait for economic data to have a material impact. In this context, gold plays the role of a portfolio risk hedge."

Stocks were closed for Martin Luther King Jr. Day in the US, but analysts expect significant volatility this week as investors navigate a volatile economic environment that could further strengthen the safe-haven appeal of gold and silver.

Analysts have pointed out that European countries are likely to target large US technology companies for trade retaliation, which could have a significant impact on US economic activity given that the sector has been a core driver of US growth.

(Daily chart of spot gold, source: Internet)

PepperstoneMichael Brown, a senior market analyst, said: "I would argue that this is yet another art of the deal - throwing out outrageous threats, escalating the situation dramatically, forcing the other side to focus on the response, and then extracting concessions from it, and finally reaching some kind of agreement in a shorter time than usual. The pros and cons of this strategy and the possible long-term geopolitical implications are for others to judge. But for the market, this situation means that in the short term the market will be shaken by the overwhelming news noise, and the market will not see a rally until the next'deal moment '." He added: "Unsurprisingly, during the period of continuous news noise, some investors may choose to take profits from risky long positions or hedge downside risks through options instruments. However, all this will further strengthen the already very strong bull market logic of precious metals such as gold and silver, and the'minimum resistance path 'for their prices to rise remains clear."

(Daily chart of spot silver, source: Internet)

David Morrison, senior market analyst at Trade Nation, pointed out that while the resistance facing the precious metals sector has gradually increased, the impact of safe-haven demand has been overshadowed, and the market generally expects the Federal Reserve to keep interest rates unchanged until at least June this year.

"Despite cooling expectations for multiple Fed rate cuts in the second half of 2026, gold's rally remains unabated, supported by a general decline in confidence in other dollar assets," he said. "Gold continues to attract defensive inflows as investors in global markets are forced to adjust their risk expectations."

Silver, which has both monetary and industrial properties, continues to outperform gold due to the impact of continued pressure on the supply chain.

David Morrison added: "While the daily moving average convergence and divergence (MACD) indicator shows that silver is already significantly overbought, silver prices remain high and there are few signs that buyers will be deterred. The bulls' mainstream view is that silver is in short supply, while demand from investors and the industrial sector remains strong. As with gold, the weakness of the dollar in early trading today further boosted the market's bullish sentiment."