The fact that the US President did not impose import taxes on the first day of his term caused the Dollar Index to go down and the price of gold to skyrocket.
The US stock and bond markets are closed on January 20 (US time) for the Martin Luther King holiday. However, the foreign exchange market remains open.
Dollar Index – the index measuring the strength of the dollar with 6 major currencies – decreased 1% to 108.28 points. This is the sharpest decrease since August 2024.
This development reflects investor relief, as US President Trump did not introduce any policies related to import taxes on his first day in office. Analysts say he seems to be approaching this issue more cautiously than the strong statements made last year. During the election campaign, the US President pledged to impose 10-20% tariffs on all goods entering the US. China alone is 60-100% and Canada and Mexico 25%.
“However, investors still face the reality that from now on, policies can change suddenly and fluctuations are normal. Mr. Trump is expected to still pursue a protectionist trade policy, placing National interests come first. The question is how drastically he will do this,” said Boris Kovacevic – macro strategist at Convera.
World gold prices increased sharply in the Asian session this morning. Graph: Kitco
Gold price also increased by more than 20 USD compared to the end of last week, to 2,725 USD an ounce. The market went up mainly because the Dollar Index dropped, making gold more attractive to buyers outside the US.
Mr. Trump’s protectionist trade policies are also expected to fuel inflation. Gold will benefit in a high inflation environment.
Meanwhile, crude oil price under pressure after Mr. Trump announced a plan to maximize oil and gas production, through declaring a national energy emergency. “America is once again a producing nation and we have something that no other producing nation has, which is the largest amount of oil and gas on Earth,” he said in his inaugural address.
Currently, Brent oil price decreased by 0.02% to 80.1 USD per barrel. US crude oil WTI sometimes dropped 1.5% to 76.74 USD.