Market volatility is rising as incoming President Trump’s second term approaches. Currencies continue to fluctuate as the threat of tariffs weighs on the global economy, and has seen gold and silver prices swinging up and down.
After last week’s jump in price, and subsequent fall on Friday, gold has found some further footing this week, pushing back above $2,560 per ounce. Other currencies continue to struggle against a strong dollar, with the US dollar index gaining almost 10% since October last year as markets bet on higher interest rates for longer under President Trump.
In GBP gold remains close to the all-time high, and has hit a peak of £2,149.47 so far today. The euro continues to hover close to parity with the dollar and at €2,573.81 remains close to the record of €2,613.66 from November. Silver has also benefitted from the weaker pound and euro, at £24.38 and €29.29 respectively. With the gold-silver ratio sitting at 87.86 however, silver still looks undervalued compared to October’s ratio of 78.84.
Markets were initially cheered by a report that Trump’s team may water down the promised tariffs to be applied to goods being imported into America, but after Trump himself branded the report fake news, it looks like tariffs are still on the cards when he takes office in a few weeks.
The incoming-President also made claim over territory in Greenland, the Panama Canal, and has even expressed a desire to annex Canada in recent days, making it the 51st state. While it looks unlikely Trump could get his wishes, it continues to paint a picture of a leader that will bring uncertainty, and a US-first policy that could impact the global economy. The resignation of Canada’s Prime Minister Justin Trudeau also adds to geopolitical uncertainty of recent months.
News that China increased gold reserves for a second month running after last year’s pause also gave gold a boost and further vote of confidence. The Yuan fell to its lowest since 2023 yesterday, with China expected to be one of the main targets of any tariffs when Trump enters the White House on January 20th.
The outlook for gold remains strong in 2025, particularly if central bank buying from countries like China continues to provide support behind any economic and geopolitical factors. Volatility is likely however, particularly as Donald Trump takes office and his previous promises turn to actual policy.
