Gold Investors Remain Optimistic for 2025 Amid Trump Volatility Concerns
Gold investors are staying positive for 2025, driven by Trump’s potential impact on the economy and ongoing geopolitical tensions
Gold, Donald Trump, Inflation, Central Banks, US Economy, Trade Tensions
Bloomberg: Investors are feeling pretty good about gold right now. After a fantastic 2024, where gold saw its biggest annual gain since 2010, there’s a lot of optimism in the air.
Last year, gold prices jumped 27%, reaching nearly $2,800 an ounce. This surge was fueled by central banks, especially in China, buying up gold, along with the Federal Reserve’s easing policies. Plus, with all the geopolitical issues around the world, gold is still seen as a safe bet.
As we head into 2025, those same factors are still in play. But there’s also the looming question of what a second Trump term could mean for trade and the economy. Investors are looking at gold as a way to protect their wealth against any potential bumps in the road.
Greg Sharenow from Pacific Investment Management Co. believes that buying gold will keep being a popular move. He thinks central banks and wealthy families will keep seeing gold as a solid investment.
Some hedge funds are really going all in. For instance, Quantix Commodities has a whopping 30% of its holdings in gold, which is almost double the usual amount. They’re betting on gold hitting $3,000 by 2025.
Wall Street banks are also on board with this bullish outlook. Bank of America and JPMorgan are predicting gold will reach $3,000 by the end of this year, while UBS is eyeing $2,900. Gold was already trading above $2,600 at the start of January.
Of course, gold did take a hit after the November 5 election, as the dollar and stock market rallied. But looking ahead, many analysts think that new tariffs could stir up trade tensions and slow down economic growth.
With Trump’s proposed policies, there’s a real chance of inflation rising, which could complicate the Fed’s plans for interest rates. After their last meeting in 2024, they hinted at only two rate cuts for 2025.
Darwei Kung from DWS Group mentioned that if trade relations worsen under Trump, the stock market might react negatively. He sees gold as a smart asset to hold during such uncertain times.
Globally, potential trade wars with the US could push central banks to ease up on their policies, which would be good news for gold prices. Aline Carnizelo from Frontier Commodities believes gold could trade above $2,800 this year.
Patrick Fruzzetti from Rose Advisors pointed out that the current level of US debt is a big difference from Trump’s first term. The debt has skyrocketed to about $28 trillion, and the deficit is expected to exceed 6% of GDP in 2025.
Concerns about the US’s ability to manage this debt might make some investors shy away from Treasuries. Jeff Muhlenkamp, who has about 12% of his fund in gold, is keeping a close eye on this.
Fruzzetti summed it up well: actions speak louder than words. Until the new administration shows they can handle the deficit, he’s not cutting back on his gold investments.
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