“This year, there are no more rate cuts to be seen in Japan and Europe, while I expect the Fed to hike rates further. That means there should be more pressure on gold from May onwards,” he added.
A currency war, that could follow the possible installation of trade tariffs by the US, could however be beneficial to gold.
“As we saw in the UK after the Brexit vote, people jump into gold when they see a currency debasement. Gold essentially is a currency hedge,” said Dahdah.
And much depends on the success of Trump’s economic policies. After all, the US is still the world’s largest economy. However, any effects of his planned fiscal stimulus are unlikely to be felt this year.
“It will take Trump 9 to 12 months of ping pong with Congress before he gets a plan through,” believes Dahdah. “Once he starts implementing it, markets will initially see the benefits before it falters.”
Little more than 10 days into a Trump presidency, it is indeed quite difficult to see how he will bring four years at the helm of the world’s biggest economic, military and political power to a good end. Somewhere along the line, gold investors will almost certainly get their time in the sun.
