With the inauguration of U.S. President Donald Trump, markets have experienced significant movement!
Particularly towards the end of October, as the U.S. election process became clearer, gold prices in Turkey dropped from the peak level of 3,075 TRY per gram to around 2,800 TRY. The decline was attributed to Trump's tax policies, which created inflationary pressures, potentially disrupting the Federal Reserve's interest rate cut cycle. After this decline, while the Fed's projections for 2025 anticipated three rate cuts, the expectation of just one rate cut put pressure on gold prices for a while.
At this point, we are witnessing a rare period in the U.S. where politics significantly influences the economy.
Trump's statements, in particular, continue to fuel risk appetite in the markets. Last week, President Trump mentioned his meeting with Chinese leader Xi Jinping, expressing optimism about reaching an agreement on tax tariffs. Additionally, yesterday, President Trump criticized the Fed, stating that interest rates were too high.
In Asia, after Japan announced a 0.25% interest rate hike last week, the Dollar Index dropped from 110 to 107, signaling a weakening dollar. As the dollar loses strength, we observe increased demand for U.S. stocks and precious metals. Gold is currently priced near its historical peak of $2,790, trading at $2,770.
On the Turkish Central Bank (TCMB) side, interest rates were lowered to 45.00% last week.
The expectation of continued interest rate cuts caused a slight depreciation of the Turkish Lira, with the USD/TRY exchange rate reaching 35.75 in the Grand Bazaar. The combination of the rising dollar and higher gold prices drove gram gold to a new all-time high, peaking at 3,190 TRY in the Grand Bazaar.
Looking ahead, decisions by both the Fed and TCMB, along with Trump’s policies, will continue to play a decisive role in gold prices.
While the Fed had been expected to cut rates once, it now seems there may be two rate cuts ahead. This could lead to continued bullish movement in precious metals. Specifically, for gold, the $3,150 level appears to be a critical technical target. For USD/TRY, a target of 38.00 TRY seems likely in the near term, which could push gram gold prices into the 3,700–4,000 TRY range.
In the oil markets, President Trump’s administration has indicated plans to increase U.S. oil production.
This announcement has reignited expectations of a potential decline in oil prices. Lower oil prices could reduce U.S. inflation, indirectly supporting the Fed's rate cut policy. Such a policy would likely increase global demand for gold and silver.
This week, all eyes will be on the critical Fed interest rate decision on Wednesday.
No rate change is expected, but any commentary on the Trump-Fed conflict could directly influence the markets. On Thursday, the Eurozone is expected to announce a 0.25 bp rate cut. Following the ECB's decision, U.S. Q4 Gross Domestic Product (GDP) figures and Core Personal Consumption Expenditures (PCE) Price Index data on Friday will be the primary focus for markets.
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