Donald Trump’s presidency could light a speculative fire under gold, pushing the price to a fresh all-time high
Gold’s investment case is not just about the metal itself; it is also about how investors access it. For ETF holders, the key question is whether the fund holds physical bullion, futures, or a more complex structure, because that determines how closely the vehicle tracks spot gold, how it rolls exposure, and how much cash drag or tracking difference can appear over time. In a fast-moving macro environment, those implementation details matter as much as the headline price of gold.
The second issue is portfolio behaviour. Gold is often bought as a hedge, but it can still behave like a crowded trade when uncertainty rises. That means inflows can amplify moves in both directions: buying pressure may build quickly when sentiment turns defensive, while positioning can unwind just as fast once the catalyst fades. For long-term allocators, the relevant risk is not only price volatility, but also whether the ETF sleeve is being used as a disciplined diversifier or as a short-term macro bet.
Gold ETF demand is also tied to the policy backdrop through real rates and the dollar. When investors expect easier monetary policy or stronger inflation pressure, non-yielding assets often become more attractive on a relative basis. But if rates stay restrictive longer than expected, the opportunity cost of holding gold can rise. That makes the asset especially sensitive to the gap between market expectations and central bank action.
For portfolio construction, the practical takeaway is rebalancing discipline. A gold allocation can serve a role when stress rises across currencies, fiscal policy and geopolitical risk, but investors should avoid letting that sleeve become an oversized macro wager. ETFs make rebalancing simple, liquid and transparent — which is often the real advantage in this part of the portfolio.
Bullion could rise to $3,150 an ounce by end of 2025
As a result, gold bullion ought to be trading at $3,000 per ounce by the end of next year, the Wall Street investment bank believes. But now the bank estimates geopolitical risks could prompt speculators, who were active up until very recently, to return as Trump’s transition team continues to shock markets with its unorthodox policies and cabinet appointments. This could lift gold to $3,150 an ounce as speculators begin to take bets on whether the U.S. economy will saddle its trading partners with new punitive tariffs just as the country struggles increasingly to shoulder its immense fiscal deficits.Gold’s vote of no confidence in paper currencies backed by government fiat
The $1.83 trillion budget shortfall from this past fiscal year through September had to be met with additional borrowing, which can be inflationary should the Fed be forced to purchase more U.S. Treasury notes with freshy printed dollars. “Rising fears of inflation and fiscal risks could drive speculative positioning and ETF flows higher,” it wrote, “while U.S. debt sustainability concerns may push central banks, especially those holding large U.S. Treasury reserves, to buy more gold.” While idiosyncratic aspects can drive gold buying—including central banks actively managing their allocation of gold reserves or demand in key jewellery markets like India—a broad sustained rise in the gold price during periods of uncertainty is often viewed as a vote of no confidence in the U.S. dollar as a store of value, as well as and other paper currencies backed solely by government fiat.Trump’s tariffs could cost the average American household $2,600 a year
This concern has gathered steam amid the widespread concern that Trump’s tenure could put upward pressure on consumer prices. The President-elect already has a fondness for slapping tariffs on imported goods like steel—if necessary by relying on legal arguments citing a threat to national security in order to impose them unilaterally via executive order. “The key upside risks to inflation under the second Trump administration on the supply side are much higher tariffs,” Goldman wrote. For example, Trump has spoken about setting tariffs across the board on every good brought into the market as high as 20%, with a special 60% tariff on Chinese goods. The Peterson Institute for International Economics Original Postiie-charts/2024/trumps-bigger-tariff-proposals-would-cost-typical-american-household-over" target="_blank" rel="noopener" shape="rect">estimates this could drive the average annual spend up by $2,600 for U.S. households.Federal Reserve’s independence to set policy under attack
Governments unhappy with this would have a difficulty as the World Trade Organization’s dispute settlement tribunal, the Appellate Body, has been dormant ever since December 2019, when the U.S. first began vetoing new appointments under Trump. Just as worrying has been his insistence the White House gains a direct say on monetary policy in addition to fiscal policy, de facto ending the Federal Reserve’s political independence. In countries where this barrier has been breached, like Turkey, it can lead to spiralling inflation. Gold has subsequently been on a tear, with the cost of a standard 400-oz. gold bar recently hitting $1 million each.Enjoyed this article? Sign up for our newsletter to receive regular insights and stay connected.