Greenland Dispute Weighs on USDX; Gold and Natural Gas Rally Amid Trade Rift

The EUR/USD pair extended its advance for a second consecutive session, rising more than 0.7% as renewed tariff threats from US President Donald Trump triggered broad-based US Dollar selling. Geopolitical developments have overshadowed economic data, fueling volatility across global markets.

Risk appetite deteriorated after the White House signaled plans to impose 10% tariffs on imports from several European countries, reportedly linked to Trump’s renewed rhetoric surrounding Greenland.

Adding to the negative Dollar backdrop, global bond yields surged after Japanese Prime Minister Sanae Takaichi announced plans to cut food taxes, unsettling debt markets

Meanwhile, expectations of European retaliation have grown. Reports indicate the European Union is preparing counter-tariffs of up to €93 billion on US goods and considering measures that could restrict American companies’ access to EU markets.

Macroeconomic releases failed to shift market direction. In the US, ADP employment data showed continued labor market resilience but came in slightly below expectations. Rate-cut probabilities for January remained unchanged, while markets continue to price in roughly 45 basis points of easing through 2026.

In Europe, attention will turn to a series of speeches from European Central Bank officials, including President Christine Lagarde, alongside comments from Escriva, Villeroy, and Nagel. In the US, markets will focus on Trump’s remarks and upcoming housing data for further direction.

Gold prices extended their powerful rally for a third consecutive session on Wednesday, pushing to new all-time highs as investors sought safety amid rising geopolitical tensions and escalating trade-war fears. Heightened market volatility and persistent risk aversion continue to favor the traditional safe-haven asset.

The precious metal climbed to around the $4,850 level during European trading, supported by a sharp increase in uncertainty following renewed tariff threats from US President Donald Trump. His warning that the US could impose new duties on several European countries has unsettled global markets, reviving concerns over a broader trade conflict and reinforcing defensive positioning across asset classes.

Trump’s renewed rhetoric surrounding Greenland has been a key catalyst behind the surge in volatility.

European leaders pushed back against the threats, with French President Emmanuel Macron emphasizing that cooperation and mutual respect—not coercion—should define alliances. The increasingly confrontational tone has rattled global markets, prompting investors to rotate out of risk-sensitive assets and into gold.

Gold’s advance has been further underpinned by a softer US Dollar. The resurgence of the so-called “Sell America” trade has pressured the greenback, which slipped to a near two-week low earlier in the week. Concerns over potential retaliation from Europe and a renewed focus on de-dollarization trends have added to the Dollar’s vulnerability, providing additional tailwinds for the non-yielding metal.

Despite trimming expectations for future Fed easing, investors remain cautious as geopolitical risks dominate sentiment. Attention now turns to key US macroeconomic releases later this week, including the Personal Consumption Expenditures (PCE) Price Index and the final reading of third-quarter GDP. These data points could shape expectations for the Fed’s policy outlook and influence near-term direction for both the US Dollar and gold.

Oil prices fell in Asian trading on Wednesday as investors weighed geopolitical tensions sparked by U.S. President Donald Trump’s push to annex Greenland, while markets await a key outlook from the International Energy Agency (IEA) later in the day.

Both contracts rose in the previous session, helped by better than expected Chinese growth data.

Trump’s efforts to take control of Greenland, a semi-autonomous Danish territory, have sent jitters through global markets and raised doubts over the stability of the U.S.–European Union alliance.

Sentiment remained cautious amid expectations that the IEA’s monthly oil market report, due later on Wednesday, will point to a major supply glut. The agency is widely expected to forecast that global oil supply will outpace demand growth this year, reinforcing concerns about oversupply and keeping pressure on crude prices.

On the supply side, OPEC+ producer Kazakhstan said it had halted output at the Tengiz and Korolev oilfields on Sunday due to power distribution problems. The temporary shutdown provided limited support to prices. A Reuters report said that oil output at the two Kazakh fields may remain shut for a further seven to ten days.

US equities ended sharply lower on Tuesday after President Donald Trump threatened sweeping new tariffs on several European countries, reigniting geopolitical uncertainty tied to his push to assert control over Greenland. The escalation rattled investor confidence, triggering a broad risk-off move and a sharp rise in market volatility.

Markets were shaken after President Trump announced plans to impose new tariffs on European imports starting at 10% in February, with rates potentially rising to 25% by July, alongside threats of 200% duties on French wine and champagne. Citing Greenland as critical to national and global security, Trump signaled he would not back down, while European leaders condemned the move and prepared emergency talks on retaliation, including tariffs on up to €93 billion of US goods and possible broader measures that could restrict US access to EU markets.

Adding another layer of uncertainty, the US Supreme Court may soon rule on the legality of Trump’s proposed import tariffs. The measures rely on powers granted under the International Emergency Economic Powers Act (IEEPA), a 1977 law that allows the president to regulate international economic activity during a declared national emergency.

Beyond geopolitics, investor focus is turning to a busy week of corporate earnings, with reports from major US companies expected to provide fresh insight into the health of the economy.

Netflix was set to kick off the week’s earnings slate after the market close. The streaming giant is expected to post earnings per share of $0.55 on revenue of $11.96 billion, according to consensus estimates.

Several other heavyweight companies, including Johnson & Johnson, 3M, GE Aerospace, Intel, Procter & Gamble, and Abbott Laboratories, are scheduled to report later in the week. Investors will scrutinize the results for confirmation of corporate resilience following mixed bank earnings last week.