Trump's Trade Policies Cause Gold Price Surge
(MENAFN) Leader Donald Trump’s protectionist trade strategies have contributed to the increase in gold prices, as ongoing uncertainties and tensions disrupt the usual market trends.
This shift has caused a break in the historical negative correlation between gold and U.S. real interest rates, based on an expert's analysis shared with the media.
Hande Sekerci, the chief economist at IS Portfoy in Turkey, explained that, typically, gold prices move in the opposite direction of U.S. real interest rates—an inverse relationship.
However, recently, gold prices have been on the rise, even hitting USD3,500 per ounce on Tuesday.
This upward trend is unusual considering the typical inverse correlation between these two factors.
Since Trump's decisive win in the presidential elections, his second term has created an atmosphere filled with uncertainty, marked by immigration restrictions, tariffs, and tax cuts favoring the wealthy.
These developments have resulted in a decrease in risk appetite within the markets.
Simultaneously, gold has continued to set record highs as investors and central banks seek it out as a safe haven.
Sekerci emphasized that gold's continuous record-breaking prices should "normally move inversely to the US real interest rate." Typically, when real interest rates are expected to decline, gold prices rise, and vice versa.
However, "for a long time, gold broke this correlation and became a precious metal that can gain support from constant uncertainties."
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