Donald J. Trump’s return to the White House as the 47th President of the United States has already sent ripples through global financial markets. With his well-known stance on trade, energy policies, and economic reforms, his presidency in 2024 is expected to have a profound impact on key commodities like gold and oil in the coming years. This article explores the potential effects on these markets, backed by data and expert insights.
Gold, traditionally regarded as a safe-haven asset, thrives during periods of economic and geopolitical uncertainty. The global gold market is valued at approximately $12.6 trillion as of 2024, with a significant portion held as reserves by central banks and investors. Trump’s policies, which often heighten market volatility, could make gold a crucial asset for investors in 2025.
Gold Price Trends Under Trump
During Trump’s first term (2017–2021), gold prices rose from $1,151 per ounce in January 2017 to over $1,900 by August 2020, driven by escalating trade tensions with China, Federal Reserve rate cuts, and the COVID-19 pandemic. Analysts suggest similar drivers could come into play during his second term:
- Trade Wars: Trump’s commitment to revisiting tariffs on Chinese goods and imposing penalties on other trade partners could destabilize markets, boosting demand for gold as a hedge.
- Federal Reserve Policy: Trump’s preference for low interest rates could weaken the U.S. dollar, making gold more attractive to foreign investors. Historically, a weaker dollar correlates with higher gold prices.
- Geopolitical Risks: Ongoing tensions with Iran, Russia, or North Korea could further increase gold’s appeal as a safe haven.
In 2024, gold prices have hovered around $1,980 per ounce, and some analysts project they could climb beyond $2,100 in 2025, especially if economic uncertainty persists. However, if Trump’s pro-business policies spur stock market growth, gold might face downward pressure as investors shift to equities.
Trump’s Energy Policies and Their Impact on Oil
Oil prices are heavily influenced by supply-demand dynamics, geopolitical events, and government policies. Trump’s “America First” energy agenda, which prioritizes domestic oil production and reduces regulations, is likely to play a pivotal role in shaping oil markets in 2025.
Oil Supply and Pricing Dynamics
Under Trump’s first term, U.S. crude oil production surged from 8.9 million barrels per day (bpd) in 2016 to a record 13 million bpd in 2019, making the U.S. the world’s largest producer. His policies included rolling back Obama-era environmental regulations and promoting fossil fuel exploration, which led to increased supply and relatively stable oil prices.
As of November 2024, crude oil prices are trading at around $80 per barrel, recovering from a slump earlier in the year. Analysts suggest that Trump’s policies could lead to the following trends in 2025:
- Increased Supply: Expanded drilling in regions like the Gulf of Mexico and Alaska could flood the market with additional crude, potentially pushing prices down.
- Geopolitical Tensions: Renewed sanctions on Iran or conflicts in the Middle East might disrupt global oil supplies, creating upward pressure on prices.
- OPEC’s Role: If U.S. production increases, OPEC might cut output to stabilize prices, creating a tug-of-war in global oil markets.
Transition to Renewables?
Trump’s limited focus on renewable energy could slow the global transition to cleaner fuels. This might bolster traditional oil markets temporarily, as demand for fossil fuels remains robust. However, this could also lead to long-term challenges as other nations invest heavily in renewable energy infrastructure.
Real Statistics and Projections
- Gold prices are projected to rise by 5–10% annually through 2025, reaching as high as $2,200 per ounce under favorable market conditions.
- U.S. crude oil production is expected to exceed 13.5 million bpd in 2025, a significant increase from the 12.9 million bpd in 2023.
- Global oil demand is forecast to grow by 2% in 2025, driven by recovery in emerging markets, despite rising adoption of electric vehicles.
Key Takeaways for Investors
Investors in gold and oil should closely monitor Trump’s economic and foreign policies. While gold may benefit from heightened volatility and a weaker dollar, oil prices will depend on a delicate balance of supply, demand, and geopolitical factors.
In conclusion, Donald Trump’s presidency is likely to bring a mix of opportunities and challenges for commodity markets. By staying informed and adapting to changing conditions, investors can position themselves to capitalize on these trends in 2025 and beyond.
