Gold Experts Reveal How President-Elect Trump May Impact the Gold Market
Written by
Laura Beck
Edited by
Levi Leidy
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Gold is often seen as a safe investment when uncertainty rises. For gold investors, Trump’s presidency could bring both risks and opportunities. It all depends on what policies he enacts, and how the effects ripple out.
To understand how gold may perform under his administration, investors will need to keep a close eye on economic and political changes, both here in the U.S. as well as abroad.
The Gold Market Right Now
Early in 2024, inflation pushed gold higher. Investors wanted a hedge against rising prices. However, as inflation eased and interest rates climbed, gold’s gains slowed. Despite this, it remains a popular choice for those looking to protect their money during uncertain times.
“During Trump’s last presidency, we saw the gold price rise, and this has continued to rise under the Biden administration also,” explained Rick Kanda, managing director at The Gold Bullion Company. “However, it’s important to note that the gold price moves are more closely tied to factors like foreign policy and the strength of the dollar.”
As of now, gold prices are still hovering at high levels. Trump’s presidency could impact this one way or the other, depending on his economic policies. If he pushes for aggressive spending or trade reforms, investors might turn back to gold, pushing prices higher as demand rises.
Geopolitical Effects
Trump’s foreign policy plans could also have a big impact on gold. He’s promised to make tougher trade deals with China, which might increase global tensions. Political uncertainty usually makes other investments feel riskier. That puts gold in higher demand.
“Trump’s approach to the presidency has historically been more unpredictable and brings higher geopolitical risk, which can drive investors to gold,” Kanda commented. “Trump has made big claims about ending ongoing conflicts like the Russia-Ukraine war in 24 hours, a bold claim which seems unlikely, but any resolution to such geopolitical conflicts could see the gold price driven back down.”
Gold could go either way, depending on Trump’s impact on the war. If the conflict continues, gold prices will probably stay high. On the other hand, if his administration manages to reduce tensions, other markets would feel more stable, so demand for gold could be reduced.
The Value of the Dollar
The value of the U.S. dollar is one of the biggest factors influencing gold prices. Gold is priced in dollars, so when the dollar is stronger, gold tends to become more expensive, which reduces foreign demand.
“One thing to note, however, is Trump’s strong ‘America first’ approach which could push to overvalue the dollar,” Kanda said. “As the BRICS countries set to expand, many predict they are pushing for a new gold-backed currency to encourage de-dollarization. If this were to play out we’d likely see further gold accumulation and a rise in its price.”
Trump’s economic policies could have a mixed effect on the dollar. Tax cuts and deregulation might boost growth and strengthen the dollar. If his spending plans greatly increase the national debt or lead to higher inflation, the dollar could weaken. It’s hard to predict exactly what will happen and how gold will respond. But any big swings in the value of the dollar are going to affect gold prices.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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