AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
Over the past week, gold price has fallen since Trump’s election victory, with spot gold prices fell to $2,537 per ounce during trading sessions on Thursday (14 November local time). The sell-off in the precious metal was fuelled by investors’ expectations that global geopolitical risks would be reduced with Trump in office, as well as inflows attracted by a surge in bitcoin and the stock market.
Spot gold regained some of its intraday losses, closing near $2,564.70 an ounce, down 0.3 per cent from yesterday’s close. Federal Reserve Chairman Jerome Powell said today that due to the recent performance of the U.S. economy is “very strong”, the Federal Reserve does not need to “rush” to reduce interest rates, and will be carefully watched to ensure that certain inflation indicators remain within an acceptable range.
According to the latest economic data from the US Department of Labour, the US PPI rose 0.2% quarter-on-quarter in October, following increases of 0.1% and 0.2% in September and August respectively.
Market participants believe that Trump is likely to pressure the Federal Reserve to force the central bank to cut interest rates at a faster rate than expected to boost U.S. economic growth. If the Fed cuts rates at a faster rate than expected, it could lead to a weaker dollar and create a favourable atmosphere for gold. Another possible outcome of a weaker dollar is increased demand for gold, which investors, including central banks, may see as an opportunity to buy gold while it is low.
Conditions that could support higher gold prices in the coming months include inflationary pressures, a possible dovish change in the Federal Reserve and the impact of Trump’s administration. For investors, gold investments may be a good way to protect their money from falling values, falling interest rates and general economic unpredictability.
However, if the Fed maintains a cautious stance or interest rates continue to strengthen after Trump takes office, gold could be challenged as global demand for gold is directly influenced by the value of the US dollar. If there is no increase in inflation or other demand for safe-haven assets, gold’s upside potential could be limited as a stronger dollar would raise the price of gold for overseas buyers.
The recent pullback in gold prices may not be bad news for gold investors. Gold’s hedging function is critical and almost impossible to replace due to ongoing inflationary pressures and geopolitical reasons. And while a series of measures likely to be taken by Trump when he takes office should continue to push up inflation, tariff policies are directly contributing to reverse globalisation, reducing other countries’ dependence on dollar reserves and damaging dollar credit. This is the core factor that has led central banks to sell dollar assets and switch to continued gold purchases.
At the same time, the problem of huge government debt in the United States is still worsening, so gold, despite the short-term retracement pressure, but the medium and long term support for the rise of gold prices has not disappeared.
