Gold - The most certain direction of the "Trump trade"?
A survey shows that in the event of Trump winning the election, the number of people supporting gold as a safe-haven asset is twice that of the US dollar. Historically, spot gold has risen by over 50% during President Trump's term, while the US dollar has fallen by over 10%
According to the latest survey by the media, if Trump returns to the White House, gold will become the best investment portfolio hedging tool.
The survey was conducted from July 22 to 26, covering 480 respondents including portfolio managers, analysts, and retail investors. The results show that in the event of Trump winning the election, the number of people supporting gold as a safe haven asset is twice that of those supporting the US dollar.
At the same time, over 60% of respondents believe that if this Republican candidate is re-elected as president, the US dollar will eventually weaken.
The logic behind this is that Trump's advocated series of loose policies such as cutting corporate taxes, raising tariffs, and relaxing regulations stimulate economic growth while pushing up inflation and weakening the US dollar. Wall Street is concerned that the inflation caused by Trump's aggressive fiscal policies may even force the Federal Reserve to restart rate hikes.
If the Republicans achieve full control of Congress, this will give Trump greater freedom to formulate comprehensive economic policies, potentially providing further support for the price of gold.
Morgan Stanley analyst Gregory Shearer recently released a report pointing out that geopolitical tensions, expanding US fiscal deficits, global central banks, and other factors have all pushed up the price of gold. Regardless of the election results, these factors may continue to exist, and may be further amplified under Trump 2.0 and Republican control of Congress.
Shearer wrote:
Gold is in a rising position.
Taking a lesson from history, media data shows that the US dollar fell by over 10% during Trump's four years in office (January 2017-January 2021), while spot gold rose by over 50%.
It is worth noting that part of the rise in gold prices during Trump's term was due to the special impact of the COVID-19 pandemic. At that time, the Federal Reserve cut interest rates to near zero, investors sought safe havens, and this pushed gold prices to a historical high in August 2020.
This time, the macro environment is once again favorable for gold. Wall Street expects the Federal Reserve to start cutting interest rates in September. In addition, since 2022, central banks around the world have been buying gold on a large scale to reduce their dependence on the US dollar.
