PUBLISHED : 21 Jan 2025 at 07:00
Gold prices are expected to surge by more than 6% over the next three months following the inauguration of Donald Trump as US president, reflecting uncertainties surrounding US economic and political policies, local traders say.
Hua Seng Heng Gold Futures (HGF) expects gold prices to increase in the first six months of the Trump administration, with bullion rising by 6.38% in the first three months and 3.3% in six months’ time.
“According to previous data, gold prices are often supported by political uncertainties and expectations for the new president’s policies. During Trump’s first term as US president, it reflected that ‘Trump’ meant uncertainty and gold tends to like uncertainty,” HGF said in its research note.
During Trump’s first term as US president during 2017-2021, investors were concerned about political and economic policy uncertainties. The policies announced by Trump, such as “America First” and the withdrawal from international trade agreements, including the Trans-Pacific Partnership, created concerns about the global economy.
These uncertainties have prompted investors to seek safe haven assets, such as gold, to hedge financial risks, the research noted.
For his second administration, Trump has announced tax cuts for US businesses and the middle class, and investment in infrastructure to stimulate the economy. Such policies, despite having positive effects in the long term, have raised concerns about the increase in public debt in the US, which is another factor causing the price of gold to rise, HGF said.
In the first six months of 2017, the US dollar continued to weaken because the financial markets were still not confident that Trump would be able to successfully push through the policies he had announced, the research added.
According to HGF, Trump has confrontational foreign policies such as threatening to sanction trading partners such as China and Mexico, or escalating the conflict with North Korea, raising investors’ fear of geopolitical risks that could escalate globally and “making gold an attractive asset”.
Gold is used as an inflation hedge, but higher interest rates dampen its appeal. Trump’s broad trade tariff policies are expected to further ignite inflation, potentially increasing bullion’s safe-haven appeal.
Spot gold was firm on Monday, edging up 0.3% to US$2,711.29 per ounce, after falling 0.5% earlier in the day. US gold futures added 0.1% to $2,752.40.
HGF expects the gold price to fluctuate this week with an expected support level of $2,680 an ounce. If it breaks through, the next support level will be at $2,650. Resistance levels are expected at $2,725 and $2,740.
The local price of gold bars may also fluctuate, with a support level of 43,850 baht per baht weight and 43,600 baht for the next support range. The resistance levels will be 44,200 baht and 44,500 baht, said HGF.