Due to concerns about Trump’s initiation of a trade war and its potential impact on the global economy, risk-averse sentiment has increased, leading gold prices to briefly surpass $2,943 last week, setting a new historical high. However, today gold prices have seen a decline, which may be related to the recent geopolitical situation showing signs of easing.
(Background: Gold surged past $2,850 to create a new high. Is a Bitcoin safe-haven trend about to erupt?)
(Additional Context: Author of “Rich Dad Poor Dad”: February is expected to witness “the worst stock market crash in history”! Billions of dollars will flow into Bitcoin and gold.)
Gold has recently become the best-performing “Trump trade.” Since President Trump’s inauguration, it has outperformed other major asset classes. Concerns over the trade war and doubts about the potential impact on global economic growth have led to a surge in demand for gold.
So far this year, gold prices have increased weekly, reaching a historical high of $2,943 on the 11th as Trump began to implement large-scale tariffs. In some regions, such as local gold shops in Taiwan, the purchase price even exceeded $3,000. However, on Monday, prices briefly fell below $2,900 and are now reported at $2,903, although since the inauguration on January 20, gold prices have risen nearly 7%.
According to the Financial Times, in contrast to gold’s strong gains, the S&P 500 index has risen by less than 2%. Other popular trading targets affected by Trump’s policies, such as bets on a strengthening dollar, rising U.S. treasury yields, or bullish Bitcoin positions, have failed to profit and even faced declines.
HSBC precious metals analyst James Steel stated that gold tends to surge when trade contracts. During the COVID-19 pandemic and the global financial crisis, gold experienced similar upward trends. The more tariffs imposed, the greater the disruption to global trade, which only benefits gold further.
However, today’s decline in gold prices may be related to the recent geopolitical situation showing signs of easing. In addition to the potential conclusion of the Russia-Ukraine war, there may be breakthrough developments in the conflict between Israel and Hamas. Reports today suggest that Hamas is preparing to transfer Gaza to the Palestinian government, with former government employees possibly being absorbed by the new government or retiring to ensure they receive salaries.
Nonetheless, if the above conflicts experience further variables, it may drive gold prices upward once again.
Important Macro Events This Week
Additionally, due to U.S. inflation data continuing to be higher than expected, core CPI and PPI have significantly reduced the expectations for interest rate cuts, putting pressure on the cryptocurrency market. In the short term, it is important to continue monitoring changes in U.S. macro data. The key macro events in the U.S. this week are as follows:
2/17 (Monday):
– Federal Reserve Governor Michelle Bowman and Philadelphia Fed President Patrick Harker will give speeches.
– U.S. stock markets will be closed for Presidents’ Day.
– Trading for precious metals and U.S. crude oil futures contracts on the Chicago Mercantile Exchange (CME) will end early at 03:30 Taiwan time on the 18th, while stock index futures contracts will end early at 02:00 Taiwan time on the 18th.
2/18 (Tuesday):
– San Francisco Fed President Mary Daly will deliver a speech.
2/20 (Thursday):
– U.S. API crude oil inventory data for the week will be released.
– The Federal Reserve will publish the minutes of the January monetary policy meeting, and Chicago Fed President Austan Goolsbee will speak.
2/21 (Friday):
– The U.S. will release the preliminary February S&P Global Manufacturing and Services PMI.
– The final value of the University of Michigan Consumer Sentiment Index for February and the final value of the one-year inflation expectation for February will also be released.
