Gold prices spike as investors flee uncertainty surrounding Trump presidency

Gold prices spiked to two-month highs on Tuesday as the dollar tanked and markets escaped to the safe-haven asset following uncertainty over U.S. President Donald Trump’s potential tarriffs.
Spot gold rose 1.1 per cent to $2,738.19 per ounce, representing the highest level since early November, when it was testing the all time high of $2,790.15 set in October. The announcement has had a similar effect on U.S. gold futures, which rose 0.2 per cent at $2,754.40.
Meanwhile, the dollar index dipped 0.9 per cent, sliding close to a 2-week low, which makes bullion more appealing and less expensive for other currency holders.
“Today’s move has largely been about the threat of U.S. blanket tariffs following Trump’s inauguration. The information with respect to potential tariffs has only come in at a trickle,” said Daniel Ghali, commodity strategist at TD Securities.
The newly elected president has not yet detailed the universal tariffs or extra surcharges on key trade partners, a central promise of his election campaign. However, he has suggested he may impose duties on Canadian and Mexican goods as early as February 1.
During the first year of Trump’s initial administration in 2017, bullion achieved a 13 per cent yearly gain, marking its best annual performance in seven years.
Investors often view bullion as a safe asset during periods of economic and geopolitical uncertainty. However, many analysts believe Trump’s proposed policies could drive inflation, potentially prompting the U.S. Federal Reserve to keep interest rates elevated for an extended period to manage price pressures. High interest rates typically diminish the appeal of bullion, which does not yield returns.
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Federal Open Market Committee to provide insight into Fed stance
Peter Grant, vice president and senior metals strategist at Zaner Metals, suggested that market attention is also shifting to next week’s Federal Open Market Committee (FOMC) meeting and the release of Personal Consumption Expenditure (PCE) data.
The FOMC, which sets monetary policy, will likely provide insights into the Federal Reserve’s stance on interest rates. The inflation component of the PCE report, a key measure of price stability, will be closely scrutinized for indications of future policy moves.
President Donald Trump’s proposed tariffs could significantly affect the gold mining industry, with varying implications for major companies like Barrick Gold Corp (TSE: ABX) (NYSE: GOLD), Newmont Corporation (TSE: NGT) (NYSE: NEM), Calibre Mining Corp. (TSE: CXB) (OTCMRKTS: CXBMF), and Kinross Gold Corp (TSE: K) (NYSE: KGC).
Tariffs on imported mining equipment and materials may increase operational expenses, which could disproportionately impact companies with significant international operations.
Furthermore, supply chain disruptions caused by tariffs could also hinder production schedules, particularly for companies like Calibre, which operates in regions such as Newfoundland, Nicaragua and Nevada. The reliance on imported equipment or materials could expose smaller firms like Calibre to cost pressures, reducing their flexibility compared to larger players with more robust infrastructure.
Market uncertainty driven by tariffs could also benefit these companies indirectly.
The tendency to move to safe havens in time of uncertainty could benefit producers like Barrick and Newmont, which could capitalize on higher prices. Smaller players like Calibre Mining and Kinross, though less equipped to absorb rising costs, might still see improved revenues from elevated gold prices.
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