Today market analysis on behalf of Bas Kooijman is the CEO and Asset Manager of DHF Capital S.A
22nd January 2025
Gold continued its upward trajectory today, building upon yesterday’s gains, reaching levels not seen since late October. This surge has been primarily driven by a weakening US dollar and heightened demand for safe-haven assets, particularly amid the risks of escalating trade tensions following President Trump’s recent policy announcements. Donald Trump mentioned potential tariffs against the European Union and the possible implementation of a 10% tariff on Chinese imports beginning February 1st, following similar threats directed at Canada and Mexico previously. The precious metal’s value could also see further appreciation as investors seek safety amid uncertainties surrounding the president’s immigration policies and potential retaliatory actions from economic partners.
The market’s attention remains focused on inflation concerns, as Trump’s economic policies are widely perceived as inflationary. This perception has led to speculation that the Federal Reserve might maintain elevated interest rates for an extended period to manage price pressures. These considerations have gained particular significance ahead of next week’s Fed meeting, where the central bank is expected to keep its benchmark rate unchanged while carefully evaluating the implications of the new administration’s policies.
While gold’s appeal as a hedge against geopolitical risks has somewhat diminished following the Israel-Hamas ceasefire agreement and the potential easing of the conflict in Eastern Europe, other fundamental factors continue to bolster its position. Sustained demand from central banks remains a key supportive element for the precious metal’s outlook, suggesting a potentially stable foundation for future price movements.
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