This is the result of a survey recently conducted by Bloomberg. Accordingly, Donald Trump's policies are likely to weaken the USD and push the price of gold higher.
However, many experts previously said that if the Democratic candidate takes power in the new US presidential term, the USD will still weaken, not only because the US Federal Reserve (Fed) will enter a cycle of interest rate cuts but also because of the money injection, which is common every time the White House has a new owner.
Bloomberg's survey shows that people who advocate investing in gold in case Donald Trump wins the election are more than twice as likely as those betting on the strength of the US dollar.
History also supports the bullish stance on gold prices as during Donald Trump's previous term, the US dollar fell more than 10%, while spot gold prices increased more than 50%.
In his policy direction, Donald Trump has taken into account tax cuts and cumbersome regulations to promote domestic business activities. And if the Republican Party can control the US Congress in the next term, the possibility of gold prices exploding and setting a new all-time high record.
On Kitco, JP Morgan Bank experts said that gold "is in a favorable position to recover". Geopolitical tensions (in the Middle East and Ukraine) along with the growing US budget deficit and the need to diversify central bank reserves and prevent high inflation... have pushed gold to a record high of 2,483 USD/ounce recently.
These factors are likely to persist regardless of the election outcome. They could be further amplified under a “Trump 2.0” scenario.
In a latest forecast, JP Morgan Bank maintained its forecast for world gold prices at an average of $2,500/ounce in 2024 and $2,600/ounce in 2025.
Gold is forecast to set a new record high in the second half of 2024 and another record high in 2025.
In fact, gold tends to increase over time, inflation and the devaluation of most currencies in the world. Countries tend to pump money to support economic growth, ensure the lives of low-income people and social stability.
If Mr. Trump is elected President of the United States for the next term, he could see a stronger and more drastic pace of economic stimulus.
But some experts believe that geopolitical instability in many parts of the world will cool down, including Ukraine and the Middle East.
However, geopolitical factors often have short-term effects and only have a long-term impact on gold if they lead to an increase in inflation, as in the case of Ukraine in 2022.
Moreover, the US dollar and US bonds are often considered global safe haven assets when the world sees a lot of geopolitical uncertainty. The greenback does not usually benefit from domestic political instability.
Therefore, in reality, the speed of money pumping, the decline of currencies and the need to increase gold reserves/investments from big players such as central banks of countries, gold ETFs... strongly determine the precious metal.
Statistics from the World Gold Council (WGC) show that central banks have been actively buying gold since 2022 in an effort to diversify their investment portfolios. The People's Bank of China had 18 consecutive months of net purchases, before stopping purchases in May and June.
Gold ETF purchases have recently reversed and increased rapidly.
The USD is likely to be in the early stages of a prolonged weakening cycle, as China, India and many other countries, especially the BRICS, continue to make gains, as evidenced by the sustained gold buying activity seen by the WGC since 2022.
Currently, most factors, from technical to fundamental, are supporting gold prices.
The US-China trade war, which Trump initiated in 2018, could also reach new heights. This could also prompt China to rapidly reduce its dependence on the US. Gold could benefit.
Mr. Trump’s policy stance is also quite clear. On security, it is about expanding American power abroad and protecting national interests, wanting to withdraw the US from the Middle East quagmire and reduce defense spending for Europe (NATO).
On trade, Mr Trump is a protectionist. All of these policies could send the US dollar into a downward trend. Gold and many other commodities traded in US dollars would benefit.
Source: https://vietnamnet.vn/vang-la-kenh-dau-tu-an-toan-nhat-duoi-thoi-donald-trump-2-0-2307174.html
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