Background and Relevance
Donald Trump, the President of the United States, has been a significant figure in global markets due to his trade policies and comments. His recent statements about tariffs on China have directly influenced the precious metals market, including gold.
Gold is traditionally viewed as a safeguard against market uncertainty. Its price has surged over 62% this year, fueled by geopolitical tensions, central bank purchases, a shift away from the dollar, and substantial inflows into gold-backed exchange-traded funds.
Market Developments
On Friday, spot gold fell 1.7% to $4,251.19 per ounce after hitting a record high of $4,378.69 earlier in the session. This marked the first time gold surpassed $4,300 since Thursday and recorded a weekly gain of 5.8%.
Meanwhile, U.S. gold futures for December delivery dropped 0.8% to $4,268.60 per ounce.
The U.S. dollar index rose 0.1%, making gold more expensive for foreign buyers.
Trump’s Impact
Tai Wong, an independent metals trader, explained that Trump’s more conciliatory tone regarding tariffs since initially announcing a 100% tariff on China has cooled the precious metals trade.
Trump confirmed a meeting with his Chinese counterpart on Friday, easing some market anxiety over the escalating U.S.-China trade conflict.
Market Outlook
Standard Chartered Bank’s global commodity strategist, Suki Cooper, predicted an average gold price of $4,488 in 2026, with structural factors supporting the market.
Market expectations are for a 25-basis-point rate cut at the October Federal Reserve meeting and another in December.
HSBC increased its average gold price forecast for 2025 by $100, to $3,455 per ounce, and projected that gold could reach $5,000 per ounce by 2026.
Key Questions and Answers
- Q: Who is Donald Trump and why is he relevant? A: Donald Trump is the President of the United States. His trade policies and comments have significantly impacted global markets, including precious metals like gold.
- Q: What caused the recent drop in gold prices? A: The fall in gold prices was due to a firmer U.S. dollar and Trump’s comment that a ‘large-scale’ tariff on China would be unsustainable.
- Q: How has Trump’s tone influenced the precious metals market? A: Trump’s more conciliatory tone regarding tariffs has cooled the precious metals trade, according to Tai Wong, an independent metals trader.
- Q: What are market expectations for the Federal Reserve’s interest rates? A: Market expectations are for a 25-basis-point rate cut at the October Federal Reserve meeting and another in December.
- Q: What are the long-term gold price projections? A: HSBC forecasts an average gold price of $3,455 per ounce in 2025 and projects it could reach $5,000 per ounce by 2026.
