ETFs tied to precious metals and European equities moved into focus late Sunday as rising EU–U.S. trade tensions sparked a clear shift toward defensive positioning.
The move followed reports that the European Union is preparing retaliatory measures after President Donald Trump threatened new tariffs against several European allies over opposition to his proposal to bring Greenland under U.S. control. According to Reuters, the tariffs could take effect as early as Feb 1, prompting EU diplomats to draft countermeasures that may target up to €93 billion ($107.7 billion) worth of U.S. imports.
As geopolitical risk escalated, gold- and silver-backed funds were thrust into the spotlight once again as safe haven escapes. Spot gold and silver prices both touched record highs, naturally pulling in focus on products such as the SPDR Gold Shares (NYSE:GLD) and iShares Gold Trust (NYSE:IAU), which track the price of physical gold, as well as silver-focused ETFs including the iShares Silver Trust (NYSE:SLV) and Abrdn Physical Silver Shares ETF (NYSE:SIVR).
The sharp rally reinforced the role of metals ETFs as portfolio hedges during periods of political and trade uncertainty, particularly when tensions involve major developed economies. With U.S. equity markets closed Monday for the Martin Luther King Jr. Day holiday, futures trading became the primary barometer of risk sentiment, further concentrating attention on liquid safe-haven ETFs.
At the same time, Europe-focused equity ETFs faced renewed pressure as the tariff threats directly target export-heavy economies such as Germany, France, the Netherlands, and the Nordic region. Funds like the iShares MSCI Germany ETF (NYSE:EWG), iShares MSCI France ETF (NYSE:EWQ), and the iShares MSCI United Kingdom ETF (NYSE:EWU) are especially sensitive to trade disruptions, while broader regional exposure through the Vanguard FTSE Europe ETF (NYSE:VGK) and iShares MSCI Europe ETF (NYSE:IEUR) leaves investors exposed to potential retaliation-driven volatility.
U.S. futures declined sharply Sunday evening, reflecting concerns that a tit-for-tat trade dispute could weigh on global growth and corporate earnings. That uncertainty has also drawn attention to broader risk-management ETFs, including long-duration Treasury funds and volatility-linked products, though precious metals remain the clearest beneficiary so far.
With tariff deadlines approaching in early February and the EU weighing the possible use of its Anti-Coercion Instrument, ETF investors are likely to stay nimble, keeping exposure balanced between growth-sensitive regional funds and defensive allocations tied to bullion.
