"If Trump Wins Re-election, Buy Gold Not Dollar" Here's Why...

Increased Global Uncertainty Due to Trump Policies
Financial Markets Volatile... Gold Useful as a Hedge
Gold Rose 50% During Trump's First Term
Central Banks Worldwide Also Accumulating Gold Instead of Dollars

[Image source=AFP Yonhap News]

There is a forecast that if former President Donald Trump, the Republican candidate in the upcoming U.S. presidential election this November, succeeds in his re-election, gold prices may rise. It is expected that the global financial markets will be shaken by Trump's radical policies such as tariff increases, leading gold to act as a hedge.

Bloomberg's survey service 'MLIV Pulse Survey' announced on the 28th that it conducted a survey from the 22nd to the 26th (local time) targeting 480 terminal subscribers including portfolio managers and economists, revealing these results.

When asked, "Which asset would serve best as a safe haven if former President Trump’s chances of re-election increase?" 53% of respondents chose gold. This was followed by the dollar (26%) and the Swiss franc (21%).

The dominant expectation that gold prices will rise is due to Trump’s unconventional pledges that could bring uncertainty to global politics and economics. His policies on tariff hikes, deregulation, and tax cuts are pointed out as factors that could reignite inflation. This, in turn, is expected by Wall Street to pressure the Federal Reserve (Fed) to raise interest rates.

Gregory Sierra, an analyst at JP Morgan, stated that this is a factor putting upward pressure on gold prices. He said, "Geopolitical tensions, increasing U.S. fiscal deficits, central bank diversification, and inflation hedging have driven gold price increases. These factors are likely to continue regardless of the election outcome but could expand further under a second Trump term or a 'Red Wave' (Republican landslide) scenario."

Bloomberg reported that during Trump’s first term, the spot price of gold rose by more than 50%.

Bloomberg added that with the Fed expected to cut the benchmark interest rate in September, the current macroeconomic environment is favorable for gold investment. According to the Chicago Mercantile Exchange (CME) FedWatch, the probability that the U.S. benchmark interest rate in September will be lower than the current 5.25?5.5% is 100% in the interest rate futures market.

Additionally, the fact that central banks around the world are reducing their dollar holdings and increasing gold reserves is also a factor driving gold prices up.

Meanwhile, 67% of survey respondents predicted that if former President Trump succeeds in his re-election, the global reserve currency status of the dollar will be undermined. Trump has argued that a strong dollar harms domestic manufacturers.

However, opinions are divided on whether the dollar will weaken under a second Trump administration. Some expect that the dollar will remain strong due to the maintenance of a high interest rate stance resulting from Trump’s aggressive tariff measures and policies that increase fiscal deficits.

This content was produced with the assistance of AI translation services.