Gold prices (XAU/USD) continued their downward trend early Monday, dipping to around $2,695 in the Asian session. The decline comes as the US Dollar strengthens ahead of President-elect Donald Trump’s inauguration, applying pressure on the precious metal.
Market analysts predict volatility in gold prices as traders anticipate the impact of Trump’s policies following his swearing-in. Focus will be on potential trade measures, particularly his stance on tariffs aimed at bolstering US manufacturing. Any aggressive trade rhetoric from Trump could boost the US Dollar, thereby weighing on gold, which is priced in USD.
Despite this, softer-than-expected US inflation data from last week may offer some support to gold. Speculation is mounting that the Federal Reserve could cut interest rates more than once this year, which could favor gold as a non-yielding asset.
David Meger, director of metals trading at High Ridge Futures, noted, “The uncertainty regarding President Trump’s forthcoming policies has been a key driver for gold’s recent performance.”
In addition, ongoing geopolitical tensions, particularly in the Middle East and the Russia-Ukraine conflict, are expected to fuel demand for safe-haven assets like gold. The Guardian reported that Russian forces seized control of two more settlements in Ukraine’s Donetsk region on Saturday, marking a significant advance in the ongoing conflict.
As Trump’s inauguration approaches, all eyes are on the unfolding policy shifts that could shape both the US economy and global markets, with gold positioned as a potential beneficiary in times of uncertainty.
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