- Gold may breach $4,700/oz as tariffs spark safe‑haven demand.
- Silver could test $95/oz, driven by the same geopolitical anxiety.
- Indian exporters gain a pricing edge if the US dollar weakens.
- The EU‑India FTA is accelerating, offering long‑term upside for pharma, textiles, and clean‑energy stocks.
- Volatility spikes are likely in the short term, but fundamentals remain bullish.
You’re watching a trade showdown that could turbo‑charge gold while reshaping India’s market outlook.
Trump's Greenland Tariffs: Immediate Market Shock
On February 1, 2026 the United States announced a 10% import duty on eight NATO members—including Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland—escalating to 25% on June 1. The tariff is tied to President Trump's long‑standing demand to acquire Greenland, a mineral‑rich Arctic territory. By weaponising trade, the administration has introduced a new layer of geopolitical risk that instantly reverberated through commodity markets and equity indices.
For investors, the first‑order effect is a weakening of the U.S. dollar. A higher tariff barrier reduces demand for American‑produced goods in the targeted economies, depressing export volumes and pressuring the dollar‑index. A softer dollar makes dollar‑denominated assets like gold cheaper for foreign buyers, setting the stage for a price surge.
Gold and Silver: Safe‑Haven Surge Mechanics
Historically, when trade tensions spike, investors flock to precious metals. The current tariff list hits key NATO allies, creating a “trust deficit” that amplifies uncertainty. Gold, presently hovering near $4,650 per ounce, is testing a technical resistance level. A breach could unlock a rally toward $4,800–$5,000, especially if the tariff escalates into a broader trade war. Silver, at $93 per ounce, faces a similar hurdle; a breakout could push it past $95, edging toward $100.
Technical note: A “resistance level” is a price point where selling pressure historically outweighs buying pressure. When a market price closes above this level, momentum often shifts bullish.
On the commodity front, the U.S. Treasury’s move also threatens supply chains for critical minerals used in green‑energy technologies—lithium, rare earths, and nickel—all of which are abundant in Greenland. Anticipated supply constraints add another bullish catalyst for gold as investors hedge against potential industrial shortages.
Impact on Indian Equities and the EU‑India FTA
India stands at a crossroads. The tariff pressure is nudging the European Union to fast‑track its Free Trade Agreement with India. Negotiators aim to seal the deal before EU President Ursula von der Leyen’s visit in late January. The agreement promises tariff reductions for Indian pharma, textiles, gems & jewellery, steel, automotive, solar equipment, and leather sectors.
In the short term, Indian stock markets may experience heightened volatility. A weaker dollar improves export competitiveness, benefitting IT services and textile exporters. However, heightened global risk sentiment can dampen investor appetite, leading to intra‑day swings.
Long‑run fundamentals are positive. Once the FTA is ratified, Indian exporters gain preferential access to the €770‑billion EU market, potentially adding 2–3% to GDP growth over the next five years. Sectoral beneficiaries include:
- Pharmaceuticals – reduced tariffs on bulk API imports.
- Textiles – duty‑free entry for high‑value fabrics.
- Automobiles – lower component duties, boosting OEM margins.
- Solar equipment – accelerated clean‑energy projects.
Historical Parallel: Tariff Waves and Asset Rotations
The 2018 U.S.–China trade war offers a template. When the U.S. imposed 25% tariffs on Chinese steel, gold rallied 12% in three months while the dollar fell 4%. Equities in emerging markets with strong export baskets, such as India, saw a modest uptick once the initial shock faded and trade‑negotiation optimism returned.
Similarly, the 2002 “Euro‑Dollar” tension saw gold rise from $275 to $300 per ounce within weeks of the U.S. imposing tariffs on European agricultural products. The pattern repeats: tariffs → dollar weakness → precious‑metal rally → eventual market normalization.
Investor Playbook: Bull vs Bear Scenarios
Bull Case: Tariffs persist, prompting a full‑scale trade war. Dollar weakens further, gold breaches $5,000/oz, and silver tops $100. Indian exporters capitalize on a weaker dollar, while the EU‑India FTA is signed, unlocking sector‑specific growth. Positioning: increase exposure to gold ETFs, buy silver futures, and overweight Indian export‑driven equities (pharma, textiles, auto).
Bear Case: Diplomatic back‑channel talks defuse the tariff threat before June, limiting the duty to the initial 10% and then rolling it back. Dollar remains resilient, gold stalls below $4,700, and Indian market volatility is confined to a single week. Positioning: trim gold exposure, focus on quality Indian growth stocks with strong balance sheets, and keep cash for opportunistic entry.
Regardless of the outcome, diversification remains the cornerstone. Allocate a modest 5‑7% of portfolio to precious metals, maintain a core holding in Indian export leaders, and monitor the FTA negotiation timeline closely.