Under the backdrop of Trump’s ascension to power, the price of gold rose to RMB 642 per gram (Shanghai Gold Futures main contract price), a phenomenon that was not coincidental but rather the result of a combination of factors including policy uncertainty, inflation expectations, and market risk aversion. Meanwhile, developments in the financial sector, such as the Dongrong Technology incident, and dynamics in the loan market are also intricately linked. The following is a detailed analysis:

Policy Uncertainty Triggers Market Volatility and Trade Policy Risks

After taking office, Trump explicitly stated his consideration to impose a 25% tariff on Mexico and Canada. The United States has a significant silver deficit and relies on imports from Mexico and Canada, with Mexico accounting for 25% of global silver production and Canada for 10% of global supply. Such protectionist measures spark concerns about a global trade war, eroding investor confidence in the economic outlook and prompting capital flows into safe-haven assets like gold. Since November 7, 2024, 7.4 million ounces of gold have been transported to warehouses at the Chicago Mercantile Exchange.

Fiscal Policy Impact

Trump may pursue large-scale tax cuts and increased government spending. While tax cuts could stimulate business development and economic growth, they may also lead to increased government fiscal deficits. Analysts at BMO Capital Markets noted that if Trump raises tariffs and increases U.S. federal government spending, the resulting inflationary pressure could push down real interest rates, weakening the appeal of short-term bonds as a risk-free return.

Inflation Expectations Drive Gold Prices Upward and Increase Money Supply

Trump’s policies have the potential to further increase the money supply. For example, large-scale government spending often requires financing through fiscal deficits, which is usually accompanied by money creation. When the money supply in the market increases, inflationary pressures also rise accordingly.

Commodity Price Linkage

Trump’s policy adjustments in areas such as energy may impact commodity prices. On the day he took office, Trump declared a nationwide energy emergency, granting federal agencies the authority to use emergency powers to expedite energy production and infrastructure construction. Some analysts believe that this move could boost global natural gas supply, affecting global energy prices and supply chain stability. Rising commodity prices typically drive up overall price levels, further reinforcing inflation expectations and pushing gold prices higher.

Heightened Market Risk Aversion and Geopolitical Risks

The foreign policy and international stance of the Trump administration carry a certain degree of uncertainty, potentially escalating geopolitical tensions. Trump’s failure to address a peaceful resolution to the Russia-Ukraine issue and his reinforcement of imperialist geopolitical goals will support long-term demand for precious metals as a hedge.