Zhitong Finance learned that according to the latest MLIV Pulse survey, gold is the best hedge portfolio if Trump wins the election again. Among the 480 respondents, twice as many people support gold as a safe haven in the event of Trump's re-election as those who support the US dollar. More than 60% of respondents believe that the US dollar will eventually weaken if Trump wins re-election.

Historical data also supports the view shown in the survey. During Trump's four years in office, the Bloomberg Dollar Index fell by more than 10%, while the spot price of gold rose by more than 50%. Trump's platform of tax cuts, tariffs and deregulation is seen by Wall Street as inflationary and may even force the Federal Reserve to raise interest rates again. The "red wave" of Republican control of the U.S. Congress in November will give Trump more room to maneuver in formulating comprehensive economic policies, which may further ignite precious metals, which are currently hovering near all-time highs.

“ Gold is in a sweet spot for gains,” JPMorgan analyst Gregory Shearer wrote on July 24. “Geopolitical tensions, growing U.S. deficits, central bank reserve diversification, and inflation hedging have all driven gold higher, and these factors are likely to persist regardless of the election outcome, but could be further amplified in the case of Trump 2.0 or a ‘red wave.’”

Many respondents to the MLIV Pulse survey seemed to agree, with one respondent saying: “All I’m seeing is significant disruption to markets and trade, and a rapid increase in the U.S. national debt.”

Gold's gains during Trump's presidency were driven in part by investors seeking safety as the coronavirus pandemic cut the federal funds rate to near zero. In August 2020, amid the global lockdown panic, gold, which pays no interest, reached a then-record high. That's not even the biggest gain during any U.S. presidency in the past 50 years -- George Bush and Jimmy Carter had much higher returns.

This time, the macro backdrop is again favorable for gold. The Federal Reserve is expected to start cutting interest rates in September. And since 2022, major central banks have been buying gold in droves to diversify their assets and reduce their dependence on the US dollar. Two-thirds of respondents expect Trump's re-election to weaken the dollar's position as the world's reserve currency.

Kathryn Rooney Vera, chief market strategist at StoneX Group, said a second Trump term could exacerbate the trend away from the dollar as the private sector joins central banks in buying gold. "Clients are adding gold to their portfolios," Vera said. "There's a lot of anticipation for a weaker dollar. Technical, structural and fundamental factors are all supporting gold."

But betting on a weaker dollar under a Trump reelection is a controversial idea, as Wall Street’s top economists believe a second Trump term would strengthen the dollar rather than weaken it. They say Trump’s preference for tougher tariffs on U.S. trading partners and deficit-raising fiscal policies could interrupt the Federal Reserve’s expected rate cuts.

MLIV Pulse respondents were divided on the impact of Trump's economic policies on the dollar. One respondent believed the dollar would weaken regardless of the election outcome: "Continued high deficits and low interest rates will further drive de-dollarization and trigger a sovereign debt crisis. The same is true if Harris wins."

The dollar and U.S. Treasuries are often seen as global safe havens during times of geopolitical tension. But the survey results suggest the dollar could be hit by domestic political turmoil in the United States. "The U.S. is creating its own risk premium due to a potentially disorderly election and the fiscal implications of a Trump presidency, making the dollar a risk in 2025," said Kathleen Brooks, head of research at XTB.

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