With President-elect Donald Trump set to officially take the US presidency on 20 January investors will be wondering how a second Trump presidency may affect the gold price.
The gold price has climbed significantly under both previous administrations and particularly in the lead up to the 2024 election when it hit a high of US$2,788 in October last year. The precious metal’s price is currently $4,373.80 (US$2,706.94).
During October 2024 the price of gold’s precious metal cousin silver hit a 10-year high to just over US$34 an ounce, as reported by Mining.com.au.
How gold performs in 2025 will be significantly influenced by Trump’s policies and whether they wreak havoc on markets and the economy.
During his previous term in office, Trump increased oil production domestically and tariffs on goods from overseas. He has already flagged further increases again this time and committed to slashing energy prices while hiking tariffs to narrow trade deficits.
So how will this affect the price of gold?
Saxo Head of Commodity Strategy Ole S. Hansen notes that the Bloomberg Commodity Total Return Index, which tracks a basket of 24 major commodities — split almost evenly between energy, metals, and agriculture — reached a 25-month high last week.
“Our main commodities forecasts, which are generally geared towards higher prices, are for crude oil to stay mostly rangebound within a US$65-85 per barrel range, with the short-term risk being skewed to the upside; gold to reach US$2,900 per ounce; silver US$38 per ounce; and copper US$4.80 per pound.
“While the strong start to January has already brought us close to some of these targets, it is still too early to make any revisions, given the elevated level of near-term uncertainty. Also, we may have witnessed a great deal of commodity hoarding ahead of potential tariffs, highlighting a risk that the demand seen has not been driven by real end-user demand.”
The reasons for rising gold prices vary. The most recent surges can be attributed to the September interest rates cut following the Federal Open Markets Committee meeting. The global geopolitical environment, performance of the US dollar, and gold purchases by central banks, among other aspects, also drive price fluctuations.
Today (20 January) US markets climbed ahead of Trump’s inauguration as the 47th President, which lifted Australian markets this morning, as reported by Mining.com.au.
The S&P/ASX 200 rose 22.50 points, or 0.27%, to 8,332.90 points as of 10.30am AEDT.
Over the last five days, the index has gained 0.47% and is currently 2.13% below its 52-week high. However, the ASX has jumped more than 2% since news of Trump’s re-election spread through markets in November.
Over the past decade, the price of the yellow metal experienced fluctuations when in September 2011 prices reached a then all-time peak of about US$1,900 – largely driven by the aftermath of the global financial crisis. The GFC led investors to seek the security of the safe-haven asset amid economic turmoil and inflation fears.
During the past two years, gold has continued to fluctuate before hitting another all-time high of US$2,790 in late October.
The outlook for gold remains robust from a technical perspective. Whether it continues breaking record prices this year – time will tell.
Write to Adam Orlando at Mining.com.au
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