Gold prices have been trending downward. Uncertainty in the domestic political realm, expectations for additional rate cuts by the Federal Reserve and the strength of the U.S. dollar have held down the price of gold.
With political changes on the horizon in the United States, possible tariffs, tax cuts and public spending could induce high inflation rates and rising borrowing costs, according to an analysis note from Pepperstone. This could lead to tighter monetary policy, which would reduce gold’s comparative appeal.
Speculation regarding the Trump presidency’s proposed tariffs may put a pause on the Fed’s actions to reduce interest rates, if inflation begins to increase. Economists are preparing for inflation to spike again, after recent periods of consistent decline. With these hesitancies, the dollar has risen in response to proposed policies that may increase inflation and continue to weigh down the price of gold.
