Gold, Selected Currencies To Thrive Amid Trump Win - Hsbc Global Research

KUALA LUMPUR, Nov 9 (Bernama) -- Gold and certain selected foreign currencies are expected to thrive following news the Americans have elected Republican candidate Donald Trump as their new President. HSBC Global Research in a note Wednesday said gold was expected to perform well in an environment of fiscal expansion, heightened protectionism and any escalation in geopolitical risk. It said gold would also not face any intervention threat and the precious metal's prices would also likely extend their rally given its safe-haven status. "We forecast gold to rise to US$1,500 per ounce (US$1=RM4.23) and safe-haven currencies such as the Japanese yen and Swiss franc will also remain supported in the medium term," said the research house. On foreign exchange, the medium-term implications for the US dollar of Trump's proposals were more mixed but on balance would still be negative, it said. "We just need to see which policies he delivers on. Fiscal expansion and new legislation to encourage (or force) repatriation of overseas profits would likely be positive for the US dollar," it said. "However, a weaker greenback may be part of Trump's efforts to spur manufacturing; a tougher immigration policy could curtail potential growth, while a squeeze on real incomes from higher tariffs could tip the economy towards recession," said HSBC Global Research. "This, combined with a US isolationist stance, would likely encourage foreigners to sell US assets," it said. The degree of foreign exchange impact hinges on whether Trump delivers on the bulk of his campaign promises. "This may not be the case but the market will have to price in some possibility that each component would materialise. "These probabilities will shift over time, depending on Trump's rhetoric and the degree of support coming from a Republican-dominated Congress," it said. The research house noted that Trump's different policy proposals had varied implications on the US dollar, but they are not likely to all happen at once. "The question of sequencing would have implications for the dollar," it said. For example, the US dollar's negative push towards a possible trade war might happen more swiftly than its bullish drive for fiscal stimulus given the latter would require Congressional approval, it said. "In the end, this is a potentially game-changing result for the foreign exchange market and quite possibly gold," it said. The near-term price action would be dominated by the risk off mood, heightened volatility and uncertainty. "The medium-term implications would be determined by the pace and scale of policy implementation by the Trump administration, it added. -- BERNAMA