Trump Announcements Impact Gold

Gold experienced a significant ~$100 drop this week, driven by heavy Chinese selling, stock market optimism surrounding Trump’s appointment of Bessent as Treasurer, and speculation about a potential Israel-Hezbollah ceasefire. Previous large selloffs this year showed mixed post-wipeout behavior, with no clear price pattern emerging. Given the reduced political and geopolitical risks, the outlook for gold remains subdued, potentially reverting to $2,500-$2,600 in the short term. 

Geopolitical uncertainties, including rising global conflicts and Russia’s nuclear threats, have supported safe-haven demand for gold. Investors have turned to the metal as a hedge against instability. Speculation about the Federal Reserve’s interest rate cuts has also supported gold prices, as lower interest rates typically weaken the U.S. dollar and bond yields, making gold more attractive. Investors continue to view gold as a reliable store of value amid these economic challenges. 

Silver prices have experienced moderate pullbacks as well, influenced by gold and increased output from Mexico and Chile. The white metal had been supported by recovering industrial activity and strong demand in sectors like vehicle electrification and renewable energy. The gold-to-silver price ratio remained within its 10-year average, reflecting stable comparative valuations. 

Trump’s latest announcement of 25% tariffs on Mexico and Canada, effective from day one of his new term, has not yet affected metal prices but will be an interesting development to monitor over the coming weeks.

Follow Mark on Twitter @YaxleyYax