Deutsche Bank Reveals Impact of Trump Tariffs on Gold Prices, Potential Rise But Limited
Jakarta – German bank Deutsche Bank has projected that the cancellation of reciprocal tariffs by US President Donald Trump by the US Supreme Court will have an impact on global gold prices.
Deutsche Bank analysts led by Michael Hsueh noted that global gold prices fell following the court’s decision announced on Saturday, 21 February 2025, but the precious metal subsequently recovered.
According to GoldPrice data as of 02:42 New York time, spot gold prices traded at US$5,181.06, or approximately Rp 86.88 million (at an estimated exchange rate of Rp 16,770 per US dollar) per troy ounce. This represents an increase of 0.08 per cent, or 3.91 points, during trading.
The Deutsche Bank analysts assessed that the elimination of tariff policy based on the International Emergency Economic Powers Act (IEEPA) will not drastically change US fiscal conditions, as Washington maintains alternative trade policy instruments.
The cancellation of Trump’s tariffs is considered to have a positive impact on gold prices, though the effect is estimated to be limited and insignificant in the short term.
“We see evidence that this has a positive impact on gold, but only marginally,” the Deutsche Bank analysts wrote. “This is because the US can approach, though not entirely replace IEEPA with Section 122, and because tariff revenue plays a role in mitigating potential fiscal deterioration from the One Big Beautiful Bill Act.”
The OBBBA refers to a budget law enacted last year that made permanent the large-scale tax cuts since 2017. This policy reduces government revenue more than expenditure, thus increasing pressure on the fiscal deficit.
According to Deutsche Bank, if tariff revenue becomes smaller or temporary due to new regulatory limitations, the US budget deficit could potentially exceed current projections.
Conditions of deficit and high government spending can theoretically serve as a positive catalyst for gold. This is because weakening confidence in the US dollar and increased inflation concerns typically drive investors to shift towards gold as a safe haven asset.
Accordingly, Deutsche Bank believes that changes in Trump’s tariff policy do support gold prices, but only as an additional factor. The primary direction of gold prices will continue to be influenced by US fiscal conditions, inflation, and investor sentiment towards global economic stability.