Gold prices are projected to rise by over 6% in the next three months following Donald Trump’s inauguration as US president, as local traders point out growing uncertainties in US economic and political policies.
Hua Seng Heng Gold Futures (HGF) anticipates that gold prices will increase during the first half of Trump’s tenure, estimating a 6.38% rise in the initial three months, followed by an additional 3.3% increase by the end of six months.
The research note from HGF indicates that historical trends show gold prices tend to gain support during periods of political uncertainty and in response to the new president’s policies. Trump’s first presidential term demonstrated that ‘Trump’ equated to uncertainty, which generally strengthens gold’s appeal.
Throughout Trump’s earlier term from 2017 to 2021, investors were apprehensive about unpredictable political and economic policies. Initiatives such as the “America First” policy and the withdrawal from international trade agreements like the Trans-Pacific Partnership fueled concerns about the global economy.
These uncertainties have led investors to turn to safe-haven assets like gold to mitigate financial risks, according to the research.
In light of his upcoming second term, Trump has proposed tax cuts for US businesses and the middle class, along with investments in infrastructure to boost the economy. Although these policies may have long-term benefits, they have raised worries about increasing US public debt, which contributes to rising gold prices, HGF noted.
During the first half of 2017, the US dollar continued to weaken as financial markets expressed skepticism regarding Trump’s ability to implement his announced policies.
HGF also points out that Trump’s confrontational foreign policies, including threats of sanctions against trading partners like China and Mexico and escalating tensions with North Korea, have heightened investor concerns about potential geopolitical risks, making gold appear more attractive.
While gold serves as a hedge against inflation, higher interest rates can reduce its attractiveness. However, Trump’s comprehensive trade tariff policies are expected to further increase inflation, thereby enhancing gold’s safe-haven appeal.
On Monday, spot gold remained steady, rising by 0.3% to $2,711.29 per ounce, after earlier declining by 0.5%. US gold futures increased by 0.1% to $2,752.40.
HGF predicts that gold prices will fluctuate this week, with a support level set at $2,680 per ounce. If this is breached, the next support level will drop to $2,650. Resistance levels are anticipated at $2,725 and $2,740.
Similarly, the local price of gold bars is expected to fluctuate, with support levels at 43,850 baht per baht weight and 43,600 baht for the next range. Resistance levels have been identified at 44,200 baht and 44,500 baht, according to HGF.