Gold prices experienced moderate gains on Monday, with trading activity subdued due to thin market liquidity following the swearing-in of Donald Trump as the 47th President of the United States. During his inauguration speech, Trump surprised markets by stepping back from his previously aggressive tariff policies. This unexpected shift eased fears of heightened inflationary pressures, which could complicate the Federal Reserve's ability to adjust monetary policy. As a result, the US Dollar weakened, providing support for gold prices. At the time of writing, XAU/USD trades at $2,709, up 0.27%.

President Trump’s Policy Announcements

In one of his first moves as President, Trump declared a national emergency on energy and border security. The energy-focused declaration aims to fill US strategic oil reserves and enhance American oil exports, reinforcing energy independence. Simultaneously, the immigration-related directive outlines plans to deport millions of individuals identified as “criminal aliens.” These policy priorities underscore Trump’s emphasis on reshaping domestic and international relations in key areas.

While his speech marked a less confrontational tone on trade, reports from The Wall Street Journal revealed that his administration issued a memorandum directing federal agencies to evaluate existing trade policies. The memo is designed to reassess trade relationships with major partners, including China, Canada, and Mexico, which could signal significant shifts in US trade policy moving forward.

US Dollar and Market Reactions

The US Dollar Index (DXY), a benchmark that tracks the currency’s strength against a basket of six major peers, fell to a nine-day low of 107.95 during Trump’s address. The speech’s conciliatory approach on trade prompted a selloff in the greenback, though the index managed to recover slightly and stabilize above the 108.00 level later in the session.

The market is also watching Federal Reserve policy expectations. Traders are pricing in near-even odds of two interest rate cuts by the end of 2025, with the first expected as early as June. This dovish outlook for US monetary policy is likely to provide additional tailwinds for gold in the medium to long term, particularly if inflation remains contained and economic uncertainty persists.