Gold Prices Hold Steady Amid Trump Policy Uncertainty and Rate Cut Speculation
New York gold futures closed slightly lower on Friday, January 17, as the strengthening US dollar exerted pressure on the precious metal. Despite this, gold prices managed to rise for the third consecutive week, buoyed by uncertainty surrounding President Donald Trump’s policies and growing expectations of further interest rate cuts by the US Federal Reserve (Fed).
The February COMEX gold contract dipped by $2.20,or 0.1%, settling at $2,748.70 per ounce. David Meagher, director of metals trading at High Ridge Futures, noted, “Today’s downturn is not considered severe. But it is indeed more about making profit than anything else and might potentially be affected by the dollar strengthening slightly during the day. This puts upward pressure on gold prices.”
Gold had earlier hit a one-month high on Thursday, though it remains $65.60 below its all-time peak of $2,790.15, achieved in October 2024. The week’s 0.5% gain was fueled by weaker-than-expected US core inflation data released on Wednesday, which has sparked speculation that the Fed may implement multiple rate cuts this year.
Investors are currently pricing in two rate cuts by the end of 2025, with Fed Governor Christopher waller hinting at further easing if economic data continues to weaken. This has bolstered gold’s appeal as a non-yielding asset that thrives in low-interest-rate environments.
Adding to the mix is the anticipation of Trump’s inauguration on January 20.Markets are bracing for potential trade tariffs that could stoke inflation and ignite a trade war, further enhancing gold’s status as a safe-haven investment.
“uncertainty about the policies that President Trump will implement is one of the factors that support the price of gold,” Meagher emphasized. Historically, gold has been viewed as a hedge against inflation and political instability, and its allure is amplified when interest rates are low.
Key Highlights:
Table of Contents
| Metric | Details |
|————————–|—————————————————————————–|
| Friday’s Close | $2,748.70/ounce (down 0.1%) |
| Weekly Gain | 0.5% (third consecutive weekly increase) |
| One-Month High | Reached on Thursday, January 16 |
| All-Time High | $2,790.15/ounce (October 2024) |
| Fed Rate Cut Speculation | Two cuts expected by end of 2025, driven by weak inflation data |
As markets await Trump’s next moves and the Fed’s monetary policy decisions, gold remains a focal point for investors seeking stability in uncertain times. for more insights, explore the original report from InfoQuest.
Gold Prices Hold Steady Amid Trump Policy uncertainty adn rate Cut Speculation
As markets await President Trump’s policy decisions and the Federal Reserve’s next moves on interest rates, gold continues to attract investors seeking stability amid uncertainty. We sat down with Michael Thornton, a seasoned commodities analyst, to delve into the factors influencing gold prices and what the future may hold for this precious metal.
the Recent Dip in Gold Prices
Senior Editor: Michael, gold futures closed slightly lower on Friday, January 17. What do you think contributed to this dip?
Michael Thornton: The slight dip can largely be attributed to the strengthening US dollar, which often exerts downward pressure on gold prices. When the dollar strengthens, gold becomes more expensive for holders of other currencies, reducing demand. However, it’s important to note that this dip was minimal—just 0.1%—and gold still managed to post a weekly gain of 0.5%.
Gold’s Resilience Amid Uncertainty
Senior Editor: Despite the dip, gold prices have risen for three consecutive weeks. What’s driving this resilience?
Michael thornton: There are two key factors at play here. First, uncertainty surrounding President Trump’s policies, notably potential trade tariffs, is making investors nervous. Gold thrives in such uncertain environments as a safe-haven asset.Second, weak US core inflation data has fueled speculation that the Fed may cut interest rates again in 2025. Lower interest rates make non-yielding assets like gold more attractive, as the chance cost of holding them decreases.
Fed Rate Cut Speculation and Gold’s Appeal
Senior Editor: Speaking of rate cuts, the market is pricing in two cuts by the end of 2025. How does this impact gold?
Michael Thornton: Rate cuts are a meaningful driver for gold prices. When the Fed lowers rates, it reduces the yield on bonds and other fixed-income investments, making gold—which doesn’t offer a yield—more appealing. Additionally, rate cuts are typically implemented in response to economic weakness, which further bolsters gold’s status as a safe-haven asset. The expectation of two cuts by the end of 2025 is already supporting prices, and any further signs of economic softening coudl push gold even higher.
Gold’s All-Time High and Future Potential
Senior Editor: Gold hit an all-time high of $2,790.15 in October 2024 but remains below that level. Can gold reclaim its peak in the near future?
Michael Thornton: Absolutely. Gold is only about $65.60 below its all-time high, and the current habitat is ripe for a potential breakout. If the Fed follows through with rate cuts and President Trump’s policies introduce further market volatility, we could see gold not only reclaim its peak but potentially set new records. Historically, gold has performed well during periods of low interest rates and political uncertainty, and we’re seeing both of those factors at play right now.
Investment Strategies in the Current Climate
Senior Editor: for investors looking to capitalize on the current gold market, what’s your advice?
Michael Thornton: My advice woudl be to keep a close eye on the Fed’s policy announcements and any developments in Trump’s trade or economic policies. these will be the primary drivers of gold prices in the near term. For long-term investors, gold remains a solid hedge against inflation and economic instability.Diversifying a portfolio with a modest allocation to gold can provide stability during volatile periods. However, as always, it’s crucial to balance risk and not overcommit to any single asset.
