Gold Climbs Above $4,700: Geopolitical Tensions Drive Safe-Haven Demand

Here is what you need to know on Tuesday, January 20: Safe-haven flows continue to dominate the action in financial markets on Tuesday as geopolitical tensions remain high. ZEW sentiment data from Germany will be published during the European trading hours, while investors will pay close attention to fresh developments surrounding the EU-US tensions over Greenland. US President Donald Trump argued early Tuesday that Denmark is unable to adequetly protect Greenland and said that they will be discussing this issue in Davos. Trump also noted that he will impose a 200% tariff on French wines and champagnes if France declines to join the Gaza Board of Peace. Gold continues to benefit from the risk-averse market atmosphere and trades at a new record high above $4,700, rising about 1% on the day. Silver remains relatively quiet and fluctuates above $94 after gaining more than 4.5% on Monday. Financial markets in the US will return to action following a long weekend but the US economic calendar will not feature any high-impact data releases. The Automatic Data Processing (ADP) will release the Employment Change 4-week Average data later in the session. US President Donald Trump will deliver a special address at the World Economic Forum in Davos on Wednesday. After losing more than 0.3% on Monday, the US Dollar (USD) Index continues to edge lower and was last seen losing about 0.2% on the day below 99.00. In the meantime, US stock index futures are down between 1.2% and 1.6% in the European morning. The UK's Office for National Statistics reported on Tuesday that the ILO Unemployment Rate remained unchanged at 5.1% in the three months to November. In this period, the Employment Change was +82,000, compared to the 17,000 decrease recorded in October. GBP/USD showed no immediate reaction to the employment report and was last seen clinging to modest daily gains near 1.3450. The ONS will publish December inflation data on Wednesday. The data published by Statistics Canada showed on Monday that annual inflation in Canada, as measured by the change in the Consumer Price Index (CPI), climbed to 2.4% in December from 2.2% in November. This print came in above the market expectation of 2.2%. USD/CAD continues to push lower and trades near 1.3850 after closing in negative territory on Tuesday. EUR/USD preserves its bullish momentum following Monday's rally and climbs toward 1.1700 early Tuesday.