The Trump Effect: Impact on Gold

作者：Priyanka Sachdeva，Phillip Nova 高级市场分析师

In our recent Market Trends articles, we deep dived into the Trump effect on crude oil, stocks, indices, cryptocurrency, and even the Straits Times Index (STI). Today, we study more closely the Trump effect on the prices of Gold.

Recap for earlier this week

Gold prices fell slightly on Monday morning in Asia, after remaining near record highs over the weekend. The U.S. dollar strengthened as Trump initiated a trade war with tariffs, starting with Colombia, following the country’s refusal to allow two military planes carrying deported migrants to land. Meanwhile, gold investors are expecting the Federal Reserve to hold cutting rates in upcoming meetings, which typically negatively affects non-yielding assets like bullion.

The Gold benchmark, COMEX Futures hovered above the key threshold of $2800 per ounce mark, but retreated on Monday morning as the Dollar picked up pace against the basket of currencies. President Trump called for immediate rate cuts at the World Economic Forum last week, which proved bullish for Gold. Despite Trump’s urge, the market seems to be of the view that the Federal Reserve will pause on hikes in the upcoming FOMC decision on 30th January. The FED’s stance at future rates is on tap and any hawkish signal can drag down Gold further. As of 11:50 am Singapore Standard Time on Monday 27 January 2025, Gold February futures was trading at $2792.44 per ounce, down by -0.50%. 

Gold has reflected an impressive recovery from December lows despite hopes of few rate cuts by the Federal Reserve. Medium to Long-term upside momentum remains strong backed by fundamental catalysts. Adding to the tailwinds is Trump’s kickstart of global tariffs which can stall inflation and boost the demand for gold as a hedge against global market volatility. The surprise addition to tailwinds this week was China’s DeepSeek AI startup which sent shockwaves in Silicon Valley, with Nasdaq plunging 400 points. Weeker sentiments in equities could trigger a meltdown, which can navigate fund flows back to gold investments.

President Trump’s recent comments have raised concerns about potential tariffs on China. While this may pose a challenge for the dollar, it could also enhance the appeal of gold. The markets are preparing for the Federal Reserve’s outlook on interest rate cuts and Trump’s tariff plans. Gold investors should remain cautious of “headlines” that could increase market risk and volatility.

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