Gold has a longstanding reputation as a safe-haven asset, especially appealing when economies face instability. Recent events have added a new layer of intrigue, including central banks reducing interest rates, countries moving away from the U.S. dollar, and the BRICS bloc introducing a new currency concept. The anticipation has pushed gold’s value upward, but as markets correct post-election, the questions deepen. As per bullion dealers in India, Gold’s recent dip to around $2,600 per ounce from its peak of $2,800 is a modest pullback after a $1,000 gain in a year, yet it has left many ponderings were gold stands today.
Gold went boom and then banged, with a mind-boggling volatility over a period of 15 days. It began with the victory of Doanld Trump as the US President, which send gold plunging. It did find support over escalating tensions but then dampened over ceasefire talks.
As per Gold price today, Gold posted its worst day’s decline in four years thanks to two key developments: Israel agreed to a ceasefire deal with Hezbollah “in principle” and Trump nominated Scott Bessent as US Treasury Secretary, both of which likely saw gold’s safe-haven demand drop alongside prices. While Bessent’s economic views tend to back economic growth and therefore be seen as inflationary, he is deemed as a highly experienced, level-headed safe pair of hands for Trump’s cabinet. And someone who may take the sting out of some of Trump’s policies, such as aggressive tariffs which many feared were indeed inflationary.
All this while we have been talking of how the global scenario has been creating an impact on gold. However, this time we shall hold all our concentration on Trump, his sanctions, monetary policies and other economic moves.
First let’s have a look at key policy drivers that will affect gold prices- both in a positive and negative way
- Deregulation: Growth-boosting deregulation in energy and financial services could elevate interest rates, reducing gold’s appeal.
- Fiscal Policy: Extended and expanded tax cuts may bolster short-term economic growth and raise rates further, adding to gold’s challenges.
- Tariffs: Higher tariffs on China and other countries could strain emerging market currencies, curbing central bank appetite for gold purchases.
- Fed Policy: The Fed may pause its easing cycle if strong growth and tariffs push inflation higher, reducing gold’s safe-haven allure.
Gold will be seen shining under the near-term policies coming in from the US administration. Gold can achieve a target of $3000 an ounce by the end of 2025. This longer-term optimism reflects enduring structural and cyclical factors that support gold demand, even amidst challenging policy environments.
On the other hand, Trumps approach towards the country and his actions of bringing back US economic on a growth track, takes away the limelight from gold. Fed officials expressed growing confidence in the economy’s trajectory, particularly regarding inflation and the labour market. The minutes indicate that policymakers believe inflation is gradually moving toward the Fed’s 2% target, and they characterize the current labour market as robust.
These observations have significant implications for monetary policy. The Federal Open Market Committee (FOMC) unanimously voted to reduce the benchmark borrowing rate by a quarter percentage point, bringing the target range to 4.5%-4.75%. Market expectations remain divided about potential future rate cuts, with the CME’s Fed Watch tool suggesting a 63.1% probability of another rate reduction at the December meeting.
Trump has proposed various economic strategies ranging from tariff on imports from to tax cuts to potential deportations- this all may adversely affect trade relations thus creating economic uncertainty which could further benefit gold as it could once again be considered for its safe haven appeal.
As per live gold price, Investors and market watchers continue to closely monitor these developing narratives, with gold prices reflecting the complex interplay of geopolitical tensions, monetary policy, and potential fiscal changes. The precious metal’s value remains sensitive to global economic indicators and political developments, making it a critical barometer for broader market sentiment.
Gold’s rally has cooled after hitting record highs, with prices expected to stabilize around $2,700/oz in Q1 2025. Strong physical demand and rate cuts have been key drivers, but signs of weakening demand and macroeconomic volatility may cap further gains. While physical demand is waning, falling rates and macro volatility could support prices at elevated levels, albeit with less room for further significant gains.