In the lead-up to the US presidential election, gold, Bitcoin, and the US dollar were seen as the top beneficiaries of Trump’s victory. The latter two assets have since surged, while the precious metal has experienced a delayed rise, with its performance expected to peak in 2025. Let’s discuss this topic and make a trading strategy.
The article covers the following subjects:
Major Takeaways
- Gold beats Bitcoin and the US dollar in 2025.
- High investment demand pushes the XAUUSD higher.
- Concerns regarding the global economy support the precious metal.
- Long trades initiated at $2,875 can be kept open.
Weekly Fundamental Forecast for Gold
Gold has a long-term value, but its price can fluctuate significantly in the short term. Following Donald Trump’s victory in the US presidential election, gold prices experienced a significant decline. However, since then, gold has rebounded by nearly 15%. Many experts and analysts believe that gold is a primary beneficiary of the White House’s tariff policy. Initially, bitcoin and the US dollar were considered the primary winners. However, the greenback’s recent decline has contributed to the XAUUSD rally.
Meanwhile, Goldman Sachs has revised its gold forecast, raising it from $2,890 to $3,100 for the end of 2025, citing higher demand from central banks, with some anticipating up to 50 tons per month. At the same time, investor appetite for exchange-traded funds (ETFs) is on the rise. Against this backdrop, XAUUSD quotes are poised to reach $3,300 if political uncertainty persists and Donald Trump’s tariffs continue to impact the global economy.
ETF Gold Price and ETF Holdings
Source: Bloomberg.
Bank of America has set a $3,500 per ounce target, indicating a 10% increase in investment demand for the precious metal. While this may seem ambitious, it is not an insurmountable goal.
Concerns over the global economy have prompted investors to seek safety in bonds, leading to a decline in their yields. Meanwhile, the deferral of tariffs, the White House’s shift from universal to reciprocal duties on imports, and the closing of longs on the US dollar have contributed to the weakening of the greenback and the reduction of debt rates. These conditions have long been considered ideal for gold. Should this rally come as a surprise?
This is particularly notable in light of the Treasury’s plans to reduce 10-year Treasury yields through increased bill issuance while decreasing long-term bond issuance, a strategy that is expected to curb the budget deficit and stimulate non-inflationary growth in the US economy, as outlined by Treasury Secretary Scott Bessent.
Historically, a decline in debt market rates and an acceleration in inflation has often coincided with a favorable environment for gold, as real Treasury bond yields tend to decrease. The present scenario aligns with this historical pattern. The confluence of rising economic policy uncertainty and these market conditions bodes well for the XAUUSD.
Market Risk and Economic Policy Uncertainty Indexes
Source: Bloomberg.
Therefore, central banks, ETF buyers, a weak US dollar, and falling Treasury yields contributed to the precious metal rally. In addition, the transfer of bullion from Europe to the US has increased COMEX inventories by 116% since the presidential election.
Weekly Trading Plan for Gold
The primary risk factor for gold is the cessation of the armed conflict in Ukraine. Until a peace agreement is reached, XAUUSD quotes are expected to continue growing. The pullback to $2,875 per ounce allowed investors to open long positions. The recommendation is to hold.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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