Trump's Bullying Style Will Be Good For Gold - Murenbeeld
(Kitco News) - Ahead of President Donald Trump’s major address before the joint sessions of Congress, one gold analyst said that Trump bullying and threatening style of government will be good for gold in the long run.
In an interview with Kitco News, Martin Murenbeeld of Murenbeeld & Co said that in the current environment with rising geopolitical risk he expects gold prices to rise to $1,300 within the year and wouldn’t be surprised if prices rose to $1,400 an ounce.
April gold futures settled the session at $1,253.90 an ounce, down 0.4% on the day. Despite the pullback gold is up almost 9% since the start of the year.
“I am convinced that Trump will be positive for gold in the long run,” he said. “The volatility of Turmp and the uncertainty in the way he manages things is positive for gold.”
In his latest gold report, Murenbeeld used the U.S. trade deficit of as an example of how Trump’s policies will be good for gold. The president often presents the trade deficit as an example of a faltering economy and how the government over the years has made poor trade details.
However, Murenbeeld explained that the trade deficit isn’t exactly as black and white as Trump presents the issue. He explained that the U.S. Trade deficit provided countries with an excess of U.S. dollars, which in turn have been used to buy U.S. treasuries.
Reversing the trade deficit could also prove to be extremely difficult warned Murenbeeld. If the administration decided to reduce its dependency on imports by promoting domestic industries through tariffs and boarder taxes it could start a trade war that would push the U.S. into a recession.
On the flip side if the U.S. tries to increase its exports by devaluing its currency then the administration risks sparking a currency war. Either scenario would be positive for gold, he said.
“Gold investors need take note; a trade war will benefit the price of gold! Gold investors need also take note of the fact that a weaker dollar, which is somewhat central to foreign trade surpluses coming down, is also very positive for the dollar price of gold,” he said in his report.
In his address to congress, Trump is expected to present an overview of his proposed tax and fiscal policies. Analysts are expecting that if Trump is able to project confidence and further details on his proposals gold could pullback moderately.