Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
Trump’s win in the presidential election could be positive for gold in the medium term, according to John Reade, chief market strategist at the World Gold Council, due to the potential for rising inflation, tax cuts and increased budget deficits, as well as concerns about the weaponisation of the US dollar, such concerns could drive increased demand for gold.
Reade noted that US government deficits are likely to be higher under a Trump administration, and tax cuts are likely to be introduced in the near term, while gold’s appeal as a hedge against debt and economic uncertainty is likely to continue.
Global geopolitics, wars in the Middle East and Ukraine, and fears of an economic slowdown have had a positive impact on sales of gold bars and coins, the World Gold Council wrote in a recent report. Meanwhile, falling U.S. interest rates, concerns about fiscal deficits and stock prices at elevated levels should help drive flows into gold exchange-traded funds (ETFs).
After Trump’s victory, there was a wave of back-to-back sell-offs in the precious metals market, sparking investor concerns about the future of gold. However, Goldman Sachs commodities analysts this week reiterated their stance that gold prices will reach $3,000 per ounce by the end of 2025. Goldman Sachs believes that the gold market experienced profit-taking in the week after the US election, but the factors that drove gold prices to record highs have not disappeared.
Trump promised during his campaign that he would impose tariffs on imports, a policy that presents a unique opportunity for gold investors, mainly because tariffs often create economic uncertainty and inflationary pressures, which would boost investment demand for gold.
At the same time, tariffs could also put downward pressure on the U.S. dollar. During Trump’s first term in office, trade restrictions coupled with uncertainty in global supply chains weakened the value of the dollar relative to other currencies. A weaker dollar makes gold cheaper for international buyers, which increases demand and pushes up the price of the precious metal.
And the imposition of tariffs is likely to trigger retaliatory measures by their trading partners. This tit-for-tat escalation disrupts global trade and pushes up costs for businesses and consumers on both sides. In such a scenario, inflation could return with a vengeance. And gold is often used by investors as a hedge against inflation.
On Tuesday (19 November local time), geopolitical tensions once again tugged at the nerves of investors and traders as the Russian-Ukrainian conflict erupted on its 1,000th day. As Ukraine used U.S.-made missiles to attack targets in Russia for the first time, Russian President Vladimir Putin signed a decree approving a new version of Russia’s basic national policy on nuclear deterrence, lowering the threshold for the use of nuclear weapons, which caused U.S. bonds, gold and other safe-haven assets to jump sharply after markets open.
Spot gold closed at $2,636.70 per ounce today, up 0.22 per cent from the previous trading day.
