Gold Holds Above US$2,700 Amid Political and Economic Uncertainty

Gold has gained 0.25% in spot trading, maintaining its position above $2,700 per ounce.

This rise in gold prices comes amid anticipation surrounding the inauguration of Donald Trump as U.S. president and the speech he is expected to deliver later today.

The tone of his address is anticipated to set the stage for his policies, especially regarding key issues that could influence market sentiment and the economy.

Despite rising Treasury yields, which signal growing concerns about inflation and interest rates, gold continues to perform well. This is partly due to uncertainty about the future of public finances, with tax and deficit policy shifts likely to contribute to the precious metal’s appeal as a safe haven investment.

Trump’s speech is expected to be “optimistic,” according to sources cited by The Wall Street Journal, but the market will be closely watching for any clues on his stance regarding inflation, interest rates, and fiscal policy. A speech that eases market concerns could dampen gold’s recent gains, especially if it reduces the need for safe-haven assets in the face of rising Treasury yields.

The market will also be attentive to any remarks Trump makes on trade policy, particularly with China and other global trade partners. A more aggressive stance on trade could reignite global economic uncertainty, which would further support gold prices. The situation in China, where domestic demand remains weak and the economy faces challenges from declining exports, is another factor contributing to uncertainty in the global economic outlook.

Overall, while gold remains resilient in the face of rising yields and economic challenges, the direction it takes will depend on how the political landscape, particularly Trump’s policies, unfolds in the coming days.