Analysis of the current movements of commodities futures, along with cryptocurrency prices indicate that the markets look ready to repeat the moves, seen during the last tenure of US President Donald Trump from 2017 to 2021.
Some analysts could determine the commodities and cryptocurrencies price action as likely to see the influence of current geo-political and domestic issues but I find that these moves will be more influenced by the ways and means that President-elect Donald Trump will define this time while resolving the current prevailing issues.
Undoubtedly, the current situation might be different due to the presently prevailing challenges in 2025 when President-elect Donald Trump will join the office on January 20, 2025, and will meet with some different issues to resolve immediately to make the world as he wanted last time.
The following issues could fetch his attention before he redesigned policies to implement his preferences.
Debt Ceiling Limits
Last Friday, Treasury Secretary Janet Yellen told lawmakers that the US Treasury Department may need to take “extraordinary measures” as early as January 14, 2025, to prevent the United States from defaulting on its debt.
Yellen urged lawmakers in the US Congress to act to protect the faith and credit of the United States.
US debt is expected to decrease by about $54 billion on January 2 due to a scheduled redemption of nonmarketable securities held by a federal trust fund associated with medical payments.
Under a 2023 budget deal, Congress suspended the debt ceiling until Jan. 1, 2025. The US Treasury will be able to pay its bills for several months, but Congress will have to address the issue, at some point next year.
Undoubtedly, failure to act could prevent the treasury from paying its debts a US debt default would likely have severe economic consequences.
Congress set the first debt limit of $45 billion in 1939 and has had to raise that limit 103 times since, as spending has consistently outrun tax revenue. Publicly held debt was 98% of US gross domestic product as of October, compared with 32% in October 2001.
Inflation
The Fed, which began unwinding restrictive monetary policies in September 2024, is expected to cut rates further, albeit cautiously.
The stock market declined last week as the Fed’s updated projections indicated only two rate cuts in 2025, down from three previously forecasted fewer than the four to five and five cuts expected by the futures markets.
Undoubtedly, the equity markets in 2024 displayed remarkable resilience despite intermittent pullbacks triggered by inflation concerns, rate hikes, and geopolitical tensions. These pullbacks, often viewed as “trims” or “haircuts,” have allowed the broader bull market to remain intact.
The Fed, which began unwinding restrictive monetary policies in September 2024, is expected to cut rates further, albeit cautiously. The stock market declined last week as the Fed's updated projections indicated only two rate cuts in 2025, down from three previously forecasted and fewer than the four to five cuts expected by the futures market.
Energy
The energy sector tends to bring fresh challenges for President-Elect Donald Trump as the currently prevailing geo-political circumstances are likely to turn more complex as Ukrainian President Volodymyr Zelenskiy accused Slovakia's Prime Minister Robert Fico on Saturday of opening a "second energy front" against Ukraine on the orders of Russia, as a gas transit dispute between the countries deepened.
Ukraine pumps Russian natural gas through its territory to several European countries, including Slovakia. But Ukraine is expected to halt the flow when the existing transit deal - signed before Moscow invaded Ukraine - expires at the end of the year.
Undoubtedly, this major development might compel President-Elect Donald Trump to intervene between Ukraine and Russia before he compels the European Union to purchase more oil and gas from the US instead of facing more tariffs, as he warned a few days back.
This scenario has generated bearish pressure on oil and natural gas prices during the last week that could continue to keep the oil and natural gas futures under surging volatility till President-elect Donald Trump joins the office on Jan. 20, 2025.
Precious Metals
Cryptocurrencies are poised to continue their momentum after nearly doubling the market cap in 2024.
But, wider adoption in 2025 will depend on how effectively the crypto-friendly Trump administration can establish a clearer regulatory path for cryptocurrencies to thrive.
Undoubtedly, this year was a strong one for crypto, registering a 90%+ increase in total market cap," Citi Research noted in its 2025 outlook. "Markets are optimistic on the regulatory front given the incoming US administration’s crypto-friendly views and personnel."
Despite assurances by Trump had signaled a willingness to step away from the current administration’s "anti-crypto crusade," which he criticized for stifling innovation. His proposed policies include a shift from enforcement-focused regulation to a more legislative-based approach, aiming to reduce uncertainty for both investors and issuers.
This scenario shows uncertainty remains for the precious metals even after joining Donald Trump if he cannot provide a clear view of his policies to deal with U.S. debt crises and surging cryptocurrencies.
Gold Futures are trading below the 200 DMA at $2653 in the 4-hr. chart, indicating a short-term bearish trend for the XAU/USD futures.
In the Daily chart, gold futures are trading below the 100 DMA at $2643 after forming a bearish crossover between the 9 DMA and 20 DMA, indicating the continuity of the selling spree during the first half of January 2025.
Silver Futures are teetering at a pivotal point since the formation of a bearish crossover is about to be completed by a downward move by the 9 DMA below the 20 DMA in the weekly chart. I find that the natural gas futures could see a selling spree this week. This indicates the advent of a fresh selling spree in silver.
Strategic Take away for Traders
Besides analyzing the movements of the gold, silver, and natural gas futures, my advice to the trader is to judge the directional moves and the levels of resistance and support while looking at the futures movements of these three commodities and crypto-currencies, during the last tenure of the President-Elect Donald Trump from 2017 to 2021.
Conclusion: I find that the surging fear of a severe economic situation revolves around President-elect Donald Trump's hopes and expectations for his first day in office on Jan. 20, 2025.
Disclaimer: This analysis is based on observations and does not constitute investment advice. Readers are encouraged to make investment decisions in gold or natural gas at their discretion.