The price of gold is influenced by wars and conflicts. But it is also strongly impacted by the economic and monetary situation. Will Donald Trump’s return to the presidency of the United States work for or against gold in 2025?
Tribune by Jean-François Faure, expert in precious metals and currencies, president and founder ofAuCOFFRE.com.
Trump’s election drives down the price of gold in dollars
The first observation is the recording of a sharp drop in the price of gold in dollars on November 5, 2024, the day the results were announced.
Bearish trend for gold in dollars
Gold has lost 7% in 10 days but this is above all a sudden halt to the sharp rise recorded for several months. Since then, the price has recovered, but it is still on a downward trend.
The dollar strengthens
The reason for this decline is essentially the strengthening of the dollar since the announcement of Trump’s election. The curves are exactly the opposite: more than gold which does not like Trump, it is the dollar which adores the new American president.
Gold in euros in uptrend
The evolution of the price of gold in euros confirms this monetary analysis of the evolution of the price of gold since November 4, 2024. Indeed, after a short drop when the results were announced, the price of gold in euros is once again on an upward trend. There is therefore a difference between the price of gold in dollars or in euros.
Gold in dollars could continue its decline at the start of the year
Initially, it is possible that Donald Trump’s official inauguration will not be favorable to gold in dollars, for several reasons.
America first for the New York Stock Exchange
It is very likely that traders will enthusiastically welcome the conservative president’s first measures. The American economy should be boosted and the indices will rise on the other side of the Atlantic. Gold, which does not produce dividends, should be somewhat neglected, particularly in paper form (gold ETFs for example).
La bromance Trump/Musk favorable aux cryptos
Elon Musk convinced the new president to build up a reserve of Bitcoins. If this happened, it would be very favorable to the world of cryptocurrencies. Here too, gold could be abandoned by certain investors.
But for now, the head of the Federal Reserve (FED), Jerome Powell, simply declared that legally, it was not possible to integrate Bitcoins into the monetary reserve.
The most enthusiastic then estimated that this reserve could be managed by another institution such as the Treasury. A bit as if in France, it was the Caisse des Dépôts et Consignations which had this mission and not the Banque de France.
A second half favorable to gold in 2025?
Several elements may suggest that gold will record progress this year. Some analysts from banks like Goldman Sachs and JP Morgan estimate that the price will approach $3,000 per ounce. Others, even more optimistic, see this $3,000 mark crossed (Bank of America and Citigroup).
A return of inflation if the economic machine goes into overdrive?
If Donald Trump’s promises turn into reality, the American economy should quickly overheat. This risks relaunching inflation, a rise in prices which also concerns tangible materials such as gold.
An ever-increasing debt
The American debt represents 120% of GDP, or 34.6 trillion dollars. And estimates for 2028 point to a debt of 138% of GDP! This increase in the money supply is favorable to physical gold since it results in a weakening of the currency.
The continued decline in interest rates?
The American central banker will be stuck between this inflation, which could start to rise again, the financing needs of the American economy, and the “weight of the debt”. Will the reduction in interest rates that began in the fall of 2024 continue? Last year, the announcements by the head of the FED caused records for gold ($2,792 per ounce).
The evolution of geopolitical conflicts
This is the big unknown for the coming year. Donald Trump wants to resolve the war in Ukraine in 24 hours.
But above all he has a commercial vision of international relations. During his previous mandate, the trade war with China worried investors.
And, in 2024, Trump has already threatened many countries with strengthening customs barriers with significant taxes. This could lead to significant economic crises in other countries, particularly in South America and Europe.
What if ultimately it was the price of gold in euros that benefited the most from Donald Trump’s policies?
