The Changing World
When a country’s leader, in other words, its president, changes, many aspects of that country also change. Recently, the President of the United States has changed. Since the U.S. is a global superpower, the change of its president can be seen as the change of the world’s leader. Since Donald Trump took office, various global economic conditions have been shifting.
Gold: The Resurging Asset
According to the Financial Times, gold is once again being recognized as a key safe-haven asset, emerging as a major component of the so-called “Trump Trade.” Since Donald Trump became the President of the United States, concerns over a global trade war and economic slowdown have increased, leading to a steady rise in investment demand for gold.
On the 13th, gold prices surged to $2,942.70 per ounce, marking a 7% increase from the time of Trump’s inauguration. In comparison, the S&P 500 index on the New York Stock Exchange rose by only 2% during the same period. Meanwhile, the U.S. dollar index, U.S. Treasury yields, and Bitcoin prices have declined. The dollar index fell from 109 to 106, and the 10-year U.S. Treasury yield dropped from 4.62% to 4.48%. Bitcoin, which had exceeded $107,000 before Trump’s inauguration, has now fallen to $97,000. Similarly, the cryptocurrency owned by the author has also seen a decline in value. Trump’s expansion of tariffs has fueled concerns over economic slowdown and inflation, which in turn has strengthened gold’s appeal. Nicky Shiels, an analyst at MKS PAMP, noted, “There is a positive correlation between tariffs and rising gold prices.”
Additionally, Trevor Grisham, Head of Multi-Assets at RLAM, stated, “Gold serves as a hedge not only against geopolitical risks but also against inflation and fluctuations in the U.S. dollar.”On the other hand, as Trump adopts a more gradual approach to tariff implementation, the currencies of export-dependent nations, such as the euro, have appreciated. Moreover, as market concerns shift from trade wars to economic growth slowdown, demand for U.S. Treasury bonds has increased.
While U.S. stock markets have been sluggish, Hong Kong’s Hang Seng Index has surged over 13% this year, and the Euro Stoxx 50 Index has climbed by 9%, outperforming other major indices.
What Should We Do?
Experts believe that future gold prices will be heavily influenced by global economic conditions and Trump’s policies. If trade conflicts and inflation fears persist, gold’s status as a safe-haven asset is expected to strengthen further. The global economy is changing rapidly, and it is up to us to adapt and respond effectively to these transformations.