Reuters reported that the world gold price recorded at 5:00 a.m. on January 24, Vietnam time, was 2,746.4 USD/ounce, a result of the weakening USD and concerns surrounding the economic policies of US President Donald Trump, especially the risk of a trade war.
President Donald Trump said his administration is discussing imposing a 10% tariff on Chinese imports on February 1 — the same day he said Mexico and Canada could face tariffs of about 25%.
Gold is often seen as a safe haven during times of economic and geopolitical uncertainty, but policies proposed by President Trump are likely to force the US Federal Reserve to maintain high interest rates for an extended period to curb rising price pressures.
Gold prices have increased by 30% in 2024 alone. According to Forbes, the price of gold has increased rapidly due to many important reasons.
First is geopolitical uncertainty. Tensions between major powers such as the US, China and Russia have increased fears of market instability, causing investors to flock to gold - a safe haven asset.
Second is inflation concerns. Highly inflationary policies, including Mr. Trump’s proposed tariffs, make gold an effective means of preserving asset value.
Third, central banks increase their gold reserves, boosting demand and prices.
Fourth is accommodative monetary policy. Expectations that the US Federal Reserve will slow down or cut interest rates in the future make gold more attractive.
Could gold prices fall 30%? Forbes says that while gold prices are booming, the risk of a sharp decline remains. History has seen gold prices fall nearly 45% from $1,920 an ounce in 2011 to $1,050 an ounce in 2015 due to a stronger dollar and rising interest rates.
Forbes pointed out scenarios that could cause gold prices to fall by 30%, including: A tough interest rate policy from the Fed. If the Fed raises interest rates quickly and strongly, the USD will increase in value, putting strong downward pressure on gold prices.
Gold Supply Surges: If large gold mines are discovered or central banks sell off their gold reserves, the increased supply will send gold prices plummeting.
Global economic stability: If the economy recovers strongly and geopolitical tensions are resolved, the demand for safe haven gold will decrease.
Competition from other assets: Cryptocurrencies and other investment channels could siphon money away from gold, reducing the value of the precious metal.
Although the possibility of a 30% drop in gold prices is not impossible, this scenario will only happen if many factors change dramatically at the same time. Experts predict that if gold prices do fall, they will fall gradually rather than suddenly.
In the current context, uncertainty about President Donald Trump's economic policies, especially import tariffs, along with potential inflation, are still the main driving forces helping gold maintain its heat in the market.
