(Kitco News) - On Monday, Donald Trump was sworn in as the 47th President of the United States, and at least for gold investors, it’s been a pretty good start.
Gold prices are wrapping up the week near $2,800 an ounce, getting close to their record highs from late October. A lot of analysts say gold is thriving right now thanks to global uncertainty and growing concerns about inflation.
Before Trump’s inauguration, many economists and market experts warned that his policies could push inflation higher and potentially hurt global growth.
This week, Trump only added fuel to the fire. On Wednesday, he told world leaders and business executives at the World Economic Forum in Davos—via video—that he wants to see lower global interest rates.
Here’s the thing: his comments clash pretty hard with what the Federal Reserve is doing. The Fed has made it clear they’re in no rush to cut interest rates anytime soon. Why? Because the U.S. economy is solid, and the job market is holding strong, even with stubborn inflation sticking around.
Gold isn’t just reacting to Trump’s inflation talk, though. It’s also proving to be a solid safe-haven asset right now.
Trump seems ready to go head-to-head with Fed Chair Jerome Powell, and no matter who comes out on top, it’s probably not going to be great for the U.S. economy—or for everyday Americans.
And it’s not just interest rates that Trump is targeting. He’s still pushing for deeper tax cuts, which could give the economy a short-term boost but will also add to the government’s already sky-high debt.
That’s another reason analysts think gold is looking more and more appealing as a global currency — people are starting to lose faith in the U.S. monetary system.
And while Trump’s making the most noise, he’s not the only one leaning into protectionist ideas. Amid all the feel-good group hugs at Davos, the World Economic Forum also highlighted the ongoing shift toward deglobalization.
A report published at the start of the conference said this trend could cost up to $5.7 trillion — or 5% of global GDP — because of reduced trade, less cross-border investment, and lost efficiencies. Oh, and inflation? Extreme cases of fragmentation could drive it up by more than 5%.
For now, gold’s outlook seems strong, even if there’s likely to be some volatility along the way. Geopolitical and economic uncertainty should keep supporting the metal’s uptrend.
Only time will tell, but Trump’s first week in office has certainly given the gold market a strong boost.
Have a great weekend!
