How will Donald Trump's policies affect the price of gold?

During his presidential campaign, Donald Trump promised many things - from ending the war in Ukraine to mass deportations of illegal immigrants. He will take the White House presidential chair on January 20. Only then will it become clear whether his promises were just an election tactic. What is certain is that his decisions will affect the economy of the whole world.

There are several scenarios in which direction Donald Trump's influence will take. "Donald Trump will bring a very different way of leading the United States. Whereas in his first term it was difficult for him to lead any agenda under domestic pressure, he now has a strong mandate and majority support in both houses of Congress. His policies are not purely his own, but a long-gestating consensus within what is already the most influential and dominant political party, as well as business structures, that the re-elected US president will prioritize across the board," He told Roman Pilíšek, political scientist and co-founder of the Golden Reserve.

Donald Trump is taking over the federal government in a situation where the federal budget will spend over 20 percent of tax revenue on interest alone. The main issue is the imposition of tariffs. "The balance of payments or trade balance of the United States, as well as the overall economy of the federation, is completely unsustainable in the medium term. Trump's 'America First' policy during his election campaign, including the imposition of tariffs on imports from China, the EU and other countries, is a perfectly valid way to address this situation. Americans must abandon the current concept of buying goods from all over the world and borrowing heavily to make these purchases. The new way is to rebuild an industrial base at home and thus reverse the current indebtedness. To encourage domestic production, the path of tariffs is absolutely necessary," Pilíšek described.

However, many economists are concerned that the introduction of tariffs will disrupt global supply chains, which could lead to higher prices and uncertainty in world markets. "Fears that tariffs will cause prices to rise in the US are short-sighted. As long as Americans continue to live off unsustainable debt, financial markets will assess the situation as risky in the near future and will want ever higher interest rates on bonds. Sooner or later, this will cause foreign investors to dump U.S. bonds and the dollar in large numbers, and it will return exclusively to U.S. territory, where it will cause inflation that is difficult to control." Pilíšek pointed out.

The second way is to introduce tariffs in a growth economy, to favour and kick-start domestic production, which will increase import prices, but on the other hand these funds can be used to reduce taxes and to some extent offset the whole process. "The duties will bring an influx of domestic investment from abroad; many companies from Europe, for example, are moving or have already moved their production to the US. Outside the US, this behaviour will in turn cause a fall in consumer prices and, of course, a comprehensive change in the supply and demand chain system. Trump has been announcing the introduction of tariffs for a long time, and the world markets are partly counting on it." Pilíšek explained.

Precious metals traders are also waiting impatiently to see what effect the introduction of tariffs and the overall policy of the re-elected US president will have on the world economy. The gold market has had a turbulent year, with its price breaking one all-time high after another. "Market expectations for Donald Trump's policies are mostly positive, so gold might not rise as much as last year, it is expected to reach a maximum of three thousand dollars per troy ounce this year and then its price could stagnate in the range of 3,000 to 2,500 dollars. However, expectations are too high and there could be a loss of confidence in the US president's policies as early as this autumn or in the first quarter of 2026, which could push the gold price above three thousand US dollars," Pilíšek concluded.

(za)/ gnews.cz - RoZ