“We see gold as likely to be the funding source for portfolio rotation in the near term, but given the de-dollarization of trade is set to accelerate, we still see emerging market support over the coming years,” Colin Hamilton, BMO director of commodities research, said in a note on Wednesday.
While Trump’s proposed policy of increasing tariffs to discourage imports may initially be offset by expected Chinese economic stimulus, looming global trade conflict would trouble commodities markets, Hamilton said.
“We expect some renewed interest in bulk commodities through year-end given expectations of a stronger Chinese fiscal package to offset any impact from higher tariffs,” he said.
“Bi-lateral US-China tariffs are already factored into projections, but a multi-lateral trade war which drags in Europe and key Asian economies is not,” the analyst said. “We see tariffs as a headwind to demand projections…
