The prices of gold have always been sensitive to political and economic changes, particularly in the perspective of the world’s largest economy, the United States. The administrations of Donald Trump and Joe Biden had a significant impact on the gold market, shaping its volatility through trade, monetary policy, and responding to global crises. From price increases resulting from the trade war with China, through record levels during the COVID-19 pandemic, to reactions to inflation and geopolitical tensions, gold prices reflected the challenges faced by the US economy.
Trump’s First Term (2017–2021)
Donald Trump’s first term was a period of significant changes in US economic policy, which influenced the volatility of gold prices. At the beginning of his tenure in 2017, the price of gold remained around 1,200–1,300 dollars per ounce. The “America First” policy, trade tensions with China, and the first announcements of tariff hikes created an atmosphere of uncertainty, which favored increased interest in gold as a safe investment.
In 2018, gold prices rose, reaching around 1,350 dollars per ounce. This was a result of the escalation of the trade war between the US and China. Higher tariffs introduced by the Trump administration caused uncertainty in the markets, strengthening the demand for gold. Then, in 2019, fears of a global economic slowdown further drove up the price of this precious metal. The gold price then exceeded 1,500 dollars per ounce, the highest level in six years.
The biggest increase took place in 2020 when the COVID-19 pandemic completely reshaped the market situation. Quantitative easing policy introduced by the Federal Reserve, as well as record low-interest rates, contributed to a massive inflow of capital into the gold market. The price of gold reached a record high of 2,070 dollars per ounce in August 2020. It was a historic peak, driven by uncertainty over the future of the global economy and the weakening of the US dollar.
However, the end of 2020 brought stabilization in the markets, which translated into a correction of gold prices, which in December of that year, fell to around 1850 dollars per ounce. Despite this, Trump’s presidency showed how significant a role political and geopolitical factors can play in shaping the gold market.
Joe Biden’s Presidency (2021–2024)
Joe Biden taking office in January 2021 situation changed the direction of US economic policy. Biden focused on greater stability and economic recovery after the pandemic. Initially, in the first half of 2021, gold prices again rose, reaching around 1,900 dollars per ounce. This rebound was due to persistent concerns about inflation and further consequences of the pandemic crisis.
However, in the second half of 2021, the situation began to change. The Federal Reserve signaled the possibility of interest rate hikes, which limited the demand for gold. The price of gold then fell to around 1,700 dollars per ounce by the end of the year. The year 2022 brought new challenges, such as inflation rising to levels unseen for decades and geopolitical tensions, especially connected with the war in Ukraine. These factors contributed to rising gold prices, which returned to around 1,800 dollars per ounce.
In 2023, amid ongoing inflationary problems and instability in financial markets, the price of gold rose again, exceeding 2,000 dollars per ounce. It was a year full of volatility, with investors having to cope with a mixture of positive and negative economic signals. However, gold prices remained relatively stable in the last months of Biden’s presidency, as a result of cautious policy by the Federal Reserve and hope for economic improvement.
Predictions for Donald Trump’s Second Term (2025–2029)
After Donald Trump’s victory in the presidential election in November 2024, gold prices experienced a significant decline. For instance, the futures contracts for gold recorded the biggest one-day drop in over three years on the Monday after the election, falling by 2.9% to 2,617.70 USD per ounce. This decline could be due to several factors. Firstly, Trump’s victory reduced political uncertainty, prompting investors to shift capital from safe assets like gold to riskier investments like stocks. Secondly, expectations about Trump’s economic policy, including tax cuts and increased public spending, could lead to inflation rise, which in turn could increase demand for gold as a hedge against inflation. Also, a stronger dollar makes gold more expensive for investors outside the US, reducing demand for this precious metal. During the latest trading sessions, however, gold significantly rebounded, recording the biggest weekly increase since October 2023.
“Recent days have shown how dynamic and sensitive to external factors the gold market is. On Friday, we observed a clear rebound in prices, driven by escalating geopolitical tensions and expectations about the loosening of monetary policy in the US. However, as early as Monday, the market reacted sharply to reports of a possible ceasefire in the Middle East, leading to a drop in prices by over 50 dollars per ounce. Despite these turbulences, many experts believe that testing the level of 3000 USD per ounce by 2025 is entirely realistic,” comments Paweł Mazurek, Board Member of Mennica Mazovia.
Given the current situation, predictions for the gold market during Donald Trump’s second term remain largely speculative, but several key factors could influence the price of this precious metal. Firstly, if Trump’s economic policy, particularly related to trade tariffs and increased public spending, leads to inflation rise in the US, this could increase interest in gold as a hedge against rising prices. Moreover, if geopolitical instability, especially in relations with China and other large economies, escalates, investors might again direct their funds towards gold, which appears safe even in times of uncertainty.
On the other hand, a stronger US dollar, which could be a result of possible Trump’s actions in monetary policy, would make gold less attractive for investors outside the US. However, it should be noted that changes in the gold market are often short-term, and in the longer perspective, prices can stabilize or even rise, especially if geopolitical tensions or crisis phenomena impact the global economy. Although gold prices experienced a temporary decline after the election, this is certainly just one of many stages of the market cycle, and gold remains one of the safest assets worth considering in investment portfolios.
Source: https://managerplus.pl/polityka-i-ceny-zlota-jak-administracje-trumpa-i-bidena-wplywaly-na-rynek-kruszcu-34330
