Muscat: Gold and silver have benefited from the increased uncertainty caused by a wave of Trump announcements, according to a SAXO bank analyst.
In forex, speculators ended the year holding a USD 32.3 billion net long USD position versus eight Gold and silver prices have both benefited from the increased uncertainty caused by a wave of Trump announcements following his inauguration, including tariffs, with investors also evaluating their inflationary impact and effects on monetary policies. The latest run-up in prices—in gold to an 11-week high near last year’s record, and silver towards resistance around USD 31—was triggered by Trump’s threat to impose tariffs on some of its major trading partners, including Canada, Mexico, Europe, and China.
In addition, the possibility of tariffs on imports of key metals traded on the New York futures exchange has caused significant market uncertainty, uprooting normal price spread relations between spot and futures prices in the short term. Under normal circumstances, this difference reflects the cost of carrying, transportation, and storage. However, the risk of tariffs has driven up premiums for futures deliverables in New York, thereby adding another layer of support on top of the
general support is driven by uncertainty and a softer dollar.
The Dollar Index futures, which reflect the performance of six major currencies against the dollar, started a strong uptrend in late October, now showing signs of pausing. This development has added some support to gold and silver—two metals that, despite this headwind, have rallied strongly during this period, resulting in record-high gold prices being reached against multiple currencies.
Gold has rallied strongly this week, with the move accelerating after breaking resistance—now support—at $2,725, clearing the path to retest last year’s record high at $2,790.
In the Q1 2025 outlook, SAXO reiterated our long-held bullish view on both gold and silver.
Demand for investment metals continues to be fuelled by an uncertain geopolitical landscape, where global tensions and economic shifts have led investors to seek safer assets. With Trump 2.0 upon us, this development shows no signs of fading, given the potential risks of tariffs causing inflation to move higher and the dollar eventually weakening, thereby removing an obstacle standing in the way of further gains.
The report sees a potential decline in the gold-to-silver ratio, which currently trades above 89, possibly
moving towards 75—a level seen earlier in 2024.
If this occurs, and with gold reaching the current forecast of $2,900 per ounce, silver might trade above $38 per ounce.
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