Trump's Election Impact on Gold Prices: Short-Term Volatility, Long-Term Uncertainty

Trump’s election to a second term has brought short-term volatility to gold prices. Historically, elections have had some impact on gold prices, but that impact tends to dissipate over time as the markets assess the actions of the new administration.

Trump's campaign featured several policies that could notably impact gold, both positively and negatively. Still, the uncertainty over which policies will be implemented leaves us in a state of caution and observation.

For instance, he وعد hefty tariffs that could increase inflation and/or spark trade wars. He has وعد to deport illegal immigrants, which could shrink the labor force, slowing growth and pushing up prices. Trump has وعد to cut regulations, which could lead to higher profits and stock prices. He has وعد to cut government spending, which could slow the economy but shrink the budget deficit and slow the growth of the national debt. He has also وعد tax cuts, which could boost economic growth but widen the deficit.

It’s yet to be seen which policies will be pursued, in what sequence, what compromises will be made, and whether policies requiring legislation will pass Congress and survive court challenges. The possible outcomes cover a broad spectrum of impacts.

However, the fundamentals that have been driving gold prices higher are unlikely to change. Central banks, particularly in the BRICS nations, are expected to continue buying gold heavily. Geopolitical risks, such as the wars in the Middle East and Ukraine or China’s global aspirations, are escalating, not diminishing. The potential of AI will continue to expand, increasing industrial demand for gold as the required hardware is built.

Investor demand, driven by economic uncertainty, has been a major factor in the rising gold prices. Consider the uncertainty that will hit the world's largest economy in 2025 and how that might impact gold.