Dalio Flags Market Risks Amid Trump’s Tariffs, Points to Gold Rally

Global markets are facing renewed uncertainty following signals from U.S. President Donald Trump about potential tariff actions. Ray Dalio, founder of Bridgewater Associates, cautioned that these developments have made the direction of U.S. economic policy increasingly hard to predict.

Central Bank Pressures and Currency Risks

At the World Economic Forum in Davos, Dalio highlighted mounting stress in the monetary system. He pointed out that central banks are altering how they manage traditional currencies, creating friction between those who hold money and those who depend on it. This tension, he explained, carries long-term risks, as both government debt and national currencies are no longer perceived as completely reliable stores of value.

Dalio pointed to gold as a key hedge, noting that it outperformed technology-focused assets over the past year. He added that it tends to do well when other assets struggle and could represent 5% to 15% of a typical portfolio. The precious metal recently reached an all-time high of $4,850 per ounce, climbing $260 in just 48 hours, reflecting its appeal during financial uncertainty.

Trump’s Tariffs, Market Risks, and Policy Uncertainty

Dalio’s remarks followed President Trump’s warning of potential tariffs on certain European nations, a stance intensified by disputes over Greenland. Trump indicated new tariffs could target countries that resisted his comments questioning Denmark’s control over the territory.

These announcements have fueled concerns over trade friction, prompting investors to rethink exposure to U.S. assets and influencing financial markets. Dalio emphasized that similar tensions in the past have extended beyond trade, affecting both capital flows and currency behavior. He added that, in times of international conflict, even allied countries may steer clear of one another’s government bonds and turn to more stable currencies instead.

Dalio noted back in December that Trump’s economic and regulatory policies, as well as those related to digital assets, could face difficulties in the 2026 midterm elections and might be reversed in 2028 if Democrats take back control of Congress. Meanwhile, Trump is scheduled to attend the World Economic Forum in Davos this week for discussions with other global leaders.

The forum also brings together executives from cryptocurrency firms. Coinbase CEO Brian Armstrong confirmed plans to meet with banking officials to review the proposed digital asset market structure bill in the U.S. Senate. The legislation seeks to provide clearer rules for the crypto sector, but progress has been delayed due to debates over stablecoin yields. The current draft aims to limit these rewards for customers.