Global markets are expected to react to the looming fears surrounding tariffs proposed by former President Trump.
President-elect Donald Trump has promised tariffs of up to 10% on global imports and as much as 60% on goods from China, along with a 25% levy on products from Canada and Mexico. These measures could significantly disrupt trade flows, increase costs, and provoke retaliatory actions from affected countries.
Despite concerns, Trump asserts that reports suggesting a scaling back of his tariff policy are inaccurate. While the full extent of these tariffs remains uncertain, it is clear that the road ahead for global markets will be fraught with challenges.
Inflation and Interest Rate Concerns
There are growing worries about rising yields, largely driven by inflation risks associated with US trade protectionism, shifts in immigration policy, and persistent budget deficits. These factors could keep gold prices buoyant in 2025.
The fluctuating statements from Trump since the election have heightened uncertainty regarding potential interest rate cut in 2025. Many Federal Reserve members emphasize that more work is needed to address inflation before any cuts can be considered.
Recent services data for December revealed inflationary pressures, along with a rise in job openings for November, complicating the outlook for interest rates. This uncertainty contributed to a surge in the dollar index and a turbulent end for gold prices in the previous year, amid speculation of further Federal Reserve interest rate cuts that have influenced both normal and real bond yields.
Most traders anticipate more rate cuts in 2025; however, Trump is not inclined to support higher interest rates, aiming to bolster the US dollar in the coming years.
Oil prices fell this Tuesday as the gains from last week—driven by optimism about economic support policies in China, the world's largest crude importer—began to fade.
In contrast, natural gas futures are currently in bullish territory due to forecasts of colder-than-normal weather across much of the United States. Today, they are attempting to maintain this upward momentum with a 4% gain. However, a potential selling spree could push prices back into bearish territory if they fail to hold above the immediate support level at the 50-day moving average (currently at $3.425).
The upcoming inventory announcement this Thursday may prompt a sudden reversal in natural gas futures, especially if withdrawals fall short of expectations.
It appears that President-elect Trump may revert to policies similar to those from his previous term (2017-2021), potentially keeping commodity and stock markets in a state of heightened uncertainty throughout the year.
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