Is Gold Preparing for a New Peak? What Do Trump's Policies Mean?
Gold started the new week with a buying interest after recording its largest weekly decline since 2021.
Gold per ounce began the week with an increase of over 1%, trading above $2,590. Goldman Sachs reiterated its forecast that gold prices will rise to $3,000 per ounce by the end of 2025. The bank advised investors to consider investing in gold due to the Fed's anticipated interest rate cuts, central bank purchases of the precious metal, and the potential return of Donald Trump to the presidency. The decrease in interest rates provides an advantage for gold, which does not yield interest.
Will the Trump effect support the shift towards gold? Trump’s electoral victory has clouded expectations for interest rate decreases next year, while the possibility of his policies increasing inflation has led some investors to believe that the Fed might cut rates in the month before Trump takes office. Hedge funds have lowered their gold price forecasts after Trump’s victory, reflecting a three-month low in conjunction with the dollar's rise.
Goldman analysts noted that this wave of selling presents an "attractive entry point" for gold purchases. Saxo Capital Markets strategist Charu Chanana pointed out that the recent dollar surge has stalled, while geopolitical developments could increase demand. Reports suggesting that North Korea could send up to 100,000 troops to Ukraine further fuel this demand. The role of central banks is critically important for gold performance.
As some Fed policymakers are set to speak this week, Chicago Fed President Austan Goolsbee stated that if inflation continues to trend downward toward the bank's 2% target, rates could be "much lower" within 12 to 18 months. Boston Fed President Susan Collins noted that a rate cut is on the table for December.
Following nearly two weeks of profit-taking in the gold market after the U.S. presidential elections, SP Angel analysts report that ETF assets have decreased in recent weeks as election uncertainty has been alleviated by Trump's victory. Trump's potential inflationary policies are expected to increase the preference for U.S. Treasury bonds. These high yields are further pressuring the demand for non-yielding gold. However, central bank gold purchases are expected to continue until 2025.
SP Angel indicated that the high likelihood of geopolitical tensions between the Trump administration and China will encourage safe-haven demand for gold. BMI analysts predict that gold could face significant downside risks and volatility in 2025, and that the Fed may need to adopt a more cautious approach towards rate cuts. In the long term, gold prices are expected to remain elevated compared to pre-pandemic levels.
Gram gold found support at around 2,830 TL. Domestically, gram gold also started the week with an increase in line with ounce gold. On the first day of the week, gram gold reached nearly a 1.5% increase, rising to the 2,870 TL range. In last week's transactions, gram gold found support in the 2,830 TL region, continuing with a loss of around 5% in November.