Gold and the Tale of Hedging Amidst Modern Nationalism
February 19, 2025 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas releases market commentary from Ahmad Assiri Research Strategist at Pepperstone.
Gold has gained 8.5% since the arrival of the modern nationalist leader, Donald Trump, at the White House. His administration has unleashed a barrage of tariffs that began with neighboring countries and extended to China and Europe on the look. The first of April looms large for all nations with US trade, while the President's trade team scrutinizes each country's trade movements with the United States to determine the outcomes of reciprocal tariff measures.
"Leveling the field" was the phrase Trump used to describe the tariffs, believing they would balance international trade movements. Although certain classifications, such as the Value Added Tax VAT, may be considered tariffs, this has surprised some market participants as it represents a known unknown risk of the the administration.
Investors often need to hedge against these risks, and gold certainly remains one of the best tools for hedging against tariff risks. It has gained 6% this month alone, maintaining levels around $2,900 per ounce. The correlation between tariff news and the momentum in gold prices has increasingly tightened since November 5, which confirms that gold's movements are linked to tariff risks.
I foresee gold revolving around the $3,000 per ounce mark under the current economic conditions, bolstered by the American exceptionalism in international trade this time. Gold remains exceptionally good hedging tool during the upcoming short periods, in addition to the scarcity of actual gold. It has been noted that large quantities of gold were moved to the United States, fearing tariffs might extend to gold, leaving buyers in the United Kingdom waiting up to two months to obtain actual gold, which has contributed to the recent price increases to current levels.
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