Gold and Silver prices hit record highs but EU share prices fell on Monday as investors reacted to the threat by US President Donald Trump to impose fresh tariffs on eight European countries opposed to his proposed takeover of Greenland.

What explains the soaring price of gold?

Precious metals are seen as safer assets to hold in times of uncertainty, and the prices of both gold and silver have soared over the past year.

Last year, the price of gold soared by more than 60%, partly due to concerns about global tensions and economic uncertainty.

However, there are other factors behind the rise, including expectations of more interest rate cuts, central banks adding hundreds of tones of gold to their reserves and – in regard to silver – China announcing restrictions on exports of the metal.

The decline in the U.S. dollar’s value reflects a shift away from global dependence on the dollar as a global reserve currency, as investors take note of changes in U.S. economic policy and Trump’s pressure campaign against the Fed, some analysts said.

“Many investors and institutions around the world are looking for an alternative defensive asset,” Campbell Harvey, a professor at Duke’s Fuqua School of Business who studies commodity prices told ABC News. “Many of those investors realize they are significantly underinvested in gold.”

Meanwhile, China has been selling down its holdings of US government bonds and switching to buying gold in a process referred to as “de-dollarisation”. It wants to reduce its dependency on the US currency.

Will Gold prices continue to hit all-time highs in 2026?

Ongoing demand from Russia and China, and investor demand for gold ETFs, means the gold price could rally further.

Traditionally, a weaker dollar and lower U.S. interest rates increase the appeal of non-yielding bullion. Economic and geopolitical uncertainty also tend to be positive drivers for gold, due to its safe-haven status and ability to remain a reliable store of value. It has low correlation with other asset classes, so can act as insurance during falling markets and times of geopolitical stress.

Wall Street analysts are increasingly bullish. Citigroup recently projected that gold could reach $5,000 per ounce within three months, citing geopolitical risk, rising ETF inflows, and weakening confidence in fiat currencies. Silver, often more volatile than gold, is also expected to benefit, with some forecasts pointing toward $100 per ounce if current momentum holds.