Gold Surges To Record As Markets Brace For Trump

After a bruising day on Wall Street, global markets awoke on January 21, 2026, to a mix of cautious optimism and lingering anxiety. U.S. stock futures edged higher, gold soared to a record, and Asian shares delivered a patchwork of gains and losses as investors digested the fallout from President Donald Trump’s latest tariff threats and braced for his high-profile speech at the World Economic Forum in Davos.

The previous session had been nothing short of a rout. According to The Economic Times, the Dow Jones Industrial Average plunged 871 points (1.8%) to 48,489, the S&P 500 lost 143 points (2.1%) to 6,797, and the Nasdaq Composite retreated 561 points (2.4%) to 22,954. Technology giants led the slide—Nvidia tumbled over 4%, Tesla fell more than 4%, and heavyweights like Amazon, Apple, Microsoft, and Meta Platforms all retreated sharply. The sell-off was triggered by President Trump’s announcement of escalating 10% tariffs on eight European countries, including Denmark, Norway, Sweden, Germany, France, the United Kingdom, the Netherlands, and Finland, with the measures set to begin in February. These tariffs would stack atop a 15% levy under a pending EU trade agreement, according to the Associated Press.

The market’s reaction was swift and severe. Not only did equities tumble, but Treasuries and the dollar also sold off, reflecting what The Economic Times described as a broad “sell-the-U.S.” trade. The SPDR S&P Homebuilders ETF (XHB), a bellwether for interest-rate-sensitive sectors, dropped 2.3%. Meanwhile, the 10-year U.S. Treasury yield climbed to 4.29%, its highest since August 2025, signaling that investors expect borrowing costs to remain elevated for some time.

Amid this volatility, investors sought refuge in safe-haven assets. Gold prices crossed the $4,800 mark for the first time, gaining 1.7% as money flowed into the precious metal. Silver followed suit, while crude oil slipped 1% overnight and natural gas prices surged nearly 26% in a single session earlier in the week—its largest one-day jump in almost three years. These moves underscored the fragility of commodity markets in the face of geopolitical and economic uncertainty.

Asian markets were mixed in their response. According to the Associated Press, Hong Kong’s Hang Seng rose 0.4% to 26,584.57, the Shanghai Composite edged up 0.1% to 4,116.94, and South Korea’s Kospi gained 0.5% to 4,909.93 after hitting fresh records this month. On the other hand, Tokyo’s Nikkei 225 slipped 0.4% to 52,774.64, Australia’s S&P/ASX 200 fell 0.4% to 8,782.90, Taiwan’s Taiex dropped 1.6%, and India’s Sensex edged down less than 0.1%. Markets in Japan were particularly sensitive, as Prime Minister Sanae Takaichi called a snap election for February 8, 2026, sending yields on long-term government bonds to record levels. The yield on Japan’s 40-year government bond was trading at 4.095% early Wednesday, down from the all-time high of 4.22% hit the day before.

Back in the U.S., futures pointed to a modest rebound. S&P 500 futures rose by 0.4%, Dow Jones Industrial Average futures increased by 0.3%, and Nasdaq 100 futures climbed 0.4%, as reported by MarketWatch. This uptick, however, masked a sense of unease. As The Economic Times noted, the overnight gains reflected positioning rather than conviction, as traders hedged ahead of potential volatility tied to Trump’s Davos remarks and European responses to the new tariff threats.

The macroeconomic backdrop offered little comfort. A recent private payrolls report suggested that job growth is slowing to about 8,000 new jobs per week, a sign that the labor market is cooling. This creates a dilemma for the Federal Reserve: keep rates high to fight inflation and risk a harder landing for the economy, or cut rates and potentially stoke inflation further. The Fed is set to meet next week, and Wall Street is betting it will hold its benchmark interest rate steady. Meanwhile, Japan’s central bank will wrap up its first monetary policy meeting on Friday.

Corporate earnings added another layer of complexity. Netflix narrowly beat expectations but issued cautious guidance for the upcoming quarter, sending its stock lower in after-hours trading. United Airlines delivered a modest earnings beat, helping shares rebound after a steep regular-session drop. Interactive Brokers posted solid earnings and slightly better-than-expected revenue, though the stock struggled to recover from Tuesday’s sell-off. Investors are now eyeing upcoming results from Johnson & Johnson, Charles Schwab, Halliburton, Intel, and next week’s reports from Tesla, Amazon, Microsoft, and Meta Platforms—results that could prove decisive for the market’s direction.

President Trump’s planned speech at the World Economic Forum in Davos loomed large over the day’s trading. According to the Associated Press, Trump told reporters he planned to highlight his administration’s accomplishments during his address. His journey to Switzerland was momentarily interrupted when Air Force One returned to Washington due to a minor electrical issue; he later resumed his trip on another aircraft. The speech was widely anticipated as a potential catalyst for further market swings, with investors keenly watching for any clues about future trade policy or geopolitical risk.

Europe’s response to the tariff threats remained a wild card. European leaders have hit back, considering countermeasures such as delaying ratification of the trade agreement or imposing retaliatory tariffs. The standoff has soured Washington’s relations with its Western allies, injecting further uncertainty into global markets. As The Economic Times observed, markets are increasingly sensitive to political shockwaves, with risk sentiment shifting on a dime.

Amid all this, some areas of the market showed relative strength. Dividend-paying stocks with yields above 3% and defensive sectors like healthcare and selected energy names attracted attention from investors seeking income and stability. The Russell 2000, while declining 1.2% on Tuesday, managed to hold its short-term support, highlighting some resilience among smaller companies—at least for now.

Currency and commodity markets reflected the crosscurrents. The U.S. dollar dropped to 158.08 Japanese yen from 158.16 yen, and the euro was nearly unchanged at $1.1719. U.S. benchmark crude oil lost 56 cents to $59.80 per barrel, while Brent crude shed 70 cents to $64.22 per barrel. These moves, while modest, underscored the persistent uncertainty facing investors as they navigate a volatile start to 2026.

As the dust settles from Tuesday’s sell-off, the central question for markets remains: will elevated borrowing costs inflict more damage than a cooling job market can offset? With Trump’s Davos speech looming, earnings season accelerating, and global trade tensions simmering, the next move is likely to be driven by headlines as much as fundamentals. For now, investors are bracing for more turbulence—and hoping for clarity soon.