The price of gold has increased nearly $100 over the past month. Over the past week, the precious metal has received a jolt from President Donald Trump, who is stating publicly that he believes the U.S. dollar is too strong.
Gold is trading at slightly below $1,213 an ounce early Tuesday, according to Gold Price. On Monday, gold hit a two-month high of $1,219.43 before dipping.
After falling to around $1,125 in late December, gold started 2017 around $1,150. Gold crossed the $1,200 level in the second week of January, then briefly fell back below. Gold has remained above $1,200 in the second half of January.
Meanwhile, silver has risen more than $1 since the beginning of the year and nearly $2 since late December. Silver nearly hit $17.20 an ounce on Monday. It is trading at $17.12 early Tuesday.
Trump’s remarks and his apparent lurch toward protectionism are viewed as the primary factors in the most recent spike in gold and silver prices.
Prior to his inauguration last week, Trump stated in a Wall Street Journal interview that the dollar is too strong, breaking an unwritten rule against U.S. presidents commenting on the currency. Trump’s Treasury Secretary pick Steve Mnuchin has since echoed the president’s sentiments.
After staying strong over the course of 2016, the dollar has been declining in value compared to a basket of currencies in early 2017.
Trump argues U.S. companies cannot compete with China because the dollar is too strong and Beijing manipulates down its currency. Trump told the Wall Street Journal the U.S. might need to “get the dollar down” if changes to tax policy drive it higher.
In the realm of fiscal policy, Trump is calling for a steep decline in U.S. corporate taxes, which has created some confidence in the economy.
However, Trump is also eliciting fears due to protectionist policies for which he is advocating. Trump has repeatedly threatened to impose a border tax on companies that move American factories outside the U.S., then sell their products inside the country.
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On Monday, Trump signed an executive order putting a halt to the Trans-Pacific Partnership, a so-called free trade agreement between 12 countries located around the Pacific Ocean. China was not a party to the agreement.
The TPP, which was yet to be ratified by the U.S., would have reduced tariffs in the Pacific region. But, the agreement contained several thousand pages of fine print and was negotiated largely in secret, prompting a groundswell of opposition to the trade deal.