The U.S. dollar weakened on Sunday while gold and silver surged, as markets began pricing in the potential fallout from President Donald Trump’s latest tariff threats.
The greenback fell 0.31% against the euro to $1.16 and slipped 0.32% against the yen to 157.58. At the same time, safe-haven demand powered metals higher: gold jumped 1.95% to a fresh record of $4,684.30 an ounce, while silver rocketed 5.66% to $93.53, also a new high.
U.S. stock and bond futures were quiet because markets are closed Monday for Martin Luther King Jr. Day.
Tariffs tied to Greenland demand
On Saturday, Trump said Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland would face a 10% tariff starting Feb. 1, rising to 25% on June 1, unless a “Deal is reached for the Complete and Total purchase of Greenland.”
The move followed the arrival of troops from those countries in Greenland this past week, described as training at Denmark’s request.
Trump has continued to press the idea of the U.S. taking control of Greenland, declining to rule out military options while also keeping the door open to purchasing the territory.
EU retaliation and bigger questions about the dollar
Meanwhile, the European Union is weighing possible countermeasures — including its anti-coercion instrument, sometimes described as a “trade bazooka” due to how broad and severe it can be.
Beyond the immediate trade fight, some analysts warn the dispute could ripple into global finance by raising questions about the dollar’s dominance and the so-called “exorbitant privilege” that comes with reserve-currency status.
“The dollar’s reserve-currency status allows us to live beyond our means. Soaring debt, tariffs, and military threats jeopardize that status,” Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management, wrote on X. “When it’s lost, economic collapse will follow.”
Europe may also have leverage through its holdings of U.S. assets. European countries own about $8 trillion in U.S. bonds and equities, nearly double the amount held by the rest of the world combined, according to George Saravelos, head of FX research at Deutsche Bank.
Rep. Thomas Massie, R-Ky., echoed the warning, saying that as the dollar’s reserve role fades, the U.S. loses its ability to “tax the world” through money creation — and that the cost of maintaining current spending and servicing the debt could land more directly on American households through inflation.
