Gold News: Will Trump’s Policies Boost XAU/USD’s Safe-Haven Appeal?

How Could Trump’s Tariff Policies Impact Gold Prices?

Donald Trump’s renewed focus on tariffs could have a significant influence on gold prices. By raising the cost of imports to support domestic industries, tariffs often lead to higher consumer prices. This effect could stoke inflation, which traditionally boosts gold’s appeal as a hedge.

Analysts from Goldman Sachs suggest that inflationary pressure from tariffs could push investors to allocate more funds to gold, driving its demand higher. If inflation accelerates in 2025, gold prices could gain substantial upward momentum.

Will Tax Cuts and Deregulation Weaken the Dollar?

Trump’s proposed tax cuts and deregulation are designed to stimulate economic activity. However, these measures could expand the federal deficit, potentially weakening the U.S. dollar.

When the dollar depreciates, gold tends to benefit as it becomes cheaper for investors using other currencies. Many market participants recall similar trends during Trump’s first term, when tax policies initially sparked optimism but later raised concerns about fiscal sustainability.

Experts at Morgan Stanley suggest the dollar’s performance could be a key driver of gold prices under this administration.

Could Geopolitical Risks Drive Gold Demand?

Trump’s assertive approach to foreign policy has historically heightened global uncertainty. As a result, gold’s role as a safe-haven asset may gain prominence.

Investors seeking stability during unpredictable times often turn to gold, and the potential for diplomatic tensions could increase demand. Analysts at J.P. Morgan forecast gold could average $2,950 per ounce in 2025, with geopolitical risks being a significant contributing factor.

Inflation, Fed Policy, and Powell’s Influence

Trump’s policies could create inflationary pressures, but how these intersect with the Federal Reserve’s monetary stance remains to be seen. Fed Chair Jerome Powell has indicated a commitment to taming inflation through higher interest rates if needed, which could strengthen the dollar and weigh on gold prices.

Historically, Trump has been critical of Powell, accusing him of being overly hawkish on rates. Renewed clashes between the White House and the Fed could introduce volatility to markets, further influencing gold demand.

If the Fed opts for a tighter policy stance, it may counteract gold’s bullish momentum. Conversely, if the Fed pivots or pauses rate hikes, inflationary concerns could dominate, providing additional tailwinds for gold.

Gold Prices Forecast After Trump Takes Office

With inflation risks, a potentially weaker dollar, and geopolitical concerns on the horizon, the outlook for gold appears bullish under Trump’s policy agenda.

However, traders should closely watch the interplay between inflation trends and Federal Reserve actions. Powell’s influence on interest rates and the dollar will likely remain key factors in determining gold’s direction during Trump’s administration.

More Information in our Economic Calendar.