Trump Re-Election Jolts Metals Market As Gold Sees A 'Stumble, Not A Sea Change'

The re-election of Donald Trump has metals markets looking a little like a shaken-up snow globe—chaotic and swirling.

While some metals might be facing a rocky road, JPMorgan's Commodities Research team, led by Greg Shearer, sees gold as holding strong through the turbulence, calling recent gold action a "stumble not a sea change."

Here's the JPMorgan breakdown on what to watch in metals as this political shift unfolds.

"Timing and Sequencing Will Be Critical" For Base Metals

As tariff tensions escalate, Peterson and his team emphasize that "policy timing and sequencing will be critical." They anticipate that China's response will likely be "a more reactive mechanism" once tariffs are in place, rather than a proactive approach. In practical terms, this suggests that the market may start to factor in "risk premia" in the weeks ahead.

Traders should buckle up as base metals brace for near-term turbulence, holding off for now on any major plays.

Investors in base metal ETFs such as the United States Copper Index Fund (NYSE:CPER) and the Invesco DB Base Metals Fund (NYSE:DBB) should remain wary of their holdings.

The analysts say one metal could break the trend, though: aluminum. With supply issues dogging the bauxite market, aluminum has an "idiosyncratic fundamental support" that could "significantly mitigate bearishness from a weaker CNY." So, while aluminum may stay relatively resilient, other base metals might be taking a temporary backseat.

Read Also: Trump’s Victory A Tailwind For Domestic Steel, Risk For Canada, Say Analysts

Gold: The "Debasement Trade" Keeps The Glitter

Gold experienced a dip following the election, but JPMorgan sees this as a temporary setback rather than a major shift. With potential U.S. fiscal challenges and rising inflation concerns, Peterson anticipates gold will perform strongly in the coming years, projecting it could reach $2,850 per ounce by late 2025.

This "debasement trade" may make gold the go-to hedge as the new administration's policies take shape, especially as inflationary pressures bubble up.

This may bode well for investors in the SPDR Gold Shares ETF (NYSE:GLD) and the iShares Gold Trust (NYSE:IAU).

The Yuan Factor: Copper's Achilles' Heel?

Another key factor here is the yuan (CNY). If Trump's policies lead to further yuan depreciation—potentially up to 7.40 or even 7.8, according to JPMorgan's FX strategists—copper prices could see a roughly 5% hit, dragging prices down to around $9,000 per metric ton.

Aluminum, again, may be shielded somewhat by those supply issues, but other base metals could be feeling the squeeze.

Gold Glimmers While Base Metals Hold Their Breath

For the metals market, Trump's second term brings headwinds and a few golden highlights.

While base metals might see some strategic waiting time, aluminum could be one of the few to withstand the early hits.

Gold, meanwhile, has the long game in sight, with JPMorgan's "debasement trade" fueling bullish forecasts.

Read Next:

• JPMorgan Predicts Strong Performance For Bitcoin And Gold Under Trump Presidency

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