President elect Trump's continued tariff declaration continues to drive expectations that the "America First" policy will support the domestic economy, which in turn has pushed up the US dollar and lowered gold.

The US dollar index successfully rebounded above 106 points. Despite the current strong momentum of the US dollar, some analysts suggest that Trump's proposed tariffs could have the opposite effect, pushing down the dollar and pushing up gold prices.

Last weekend, Trump threatened the BRICS countries with a 100% tariff if they abandon the US dollar and start trading in their own reserve currency.

Trump wrote on social media last Saturday, "The BRICS countries are trying to get rid of the dollar, and our idea of standing idly by is over. We demand that these countries commit to neither creating new BRICS currencies nor supporting any other currency to replace the strong dollar, otherwise they will face 100% tariffs and should look forward to bidding farewell to the US economy

The BRICS countries have begun to develop international agreements for settling trade in member countries' currencies, but many economists and market analysts say that the trade organization is far from developing a new reserve currency.

Let's face it, the currencies of the BRICS countries will never seriously threaten the unparalleled position of the US dollar as the world's reserve currency for 80 years. The US dollar dominates as a store of value, medium of exchange, and unit of account. Additionally, the BRICS countries are not a cohesive economic or political organization, which is necessary for creating and managing a common currency, "said currency analysts at Brown Brothers Harriman in a report on Monday

Independent economist Julian Jessop commented on social media that Trump's latest threat highlights the uncertainty surrounding the strength of the US dollar.

He said, "If the US dollar is so strong and 'impossible' to replace, why do tariffs need to protect it? Trump's threat is not a vote of confidence! What if other countries retaliate by selling their holdings of US bonds, or just threaten to do so? At that time, the US dollar and the US economy will not be so good

Although some economists may consider Trump's tariff threat to be meaningless, others point out that his comments on social media further demonstrate how the US government continues to weaponize the dollar, forcing many countries to diversify their foreign exchange reserves and purchase gold.

After the United States and its Western allies imposed economic sanctions on Russia, the BRICS countries have become particularly important buyers of gold in the past two years.

Chantelle Schieven, research director at Capitalight Research, pointed out that the global trade war triggered by tit for tat tariffs should continue to support gold as a tool to hedge against economic uncertainty, as it is an important reserve asset.

She said, "The US dollar is not expected to rise in the short term, but these threats will encourage central banks around the world to continue purchasing more gold and diversify away from the dollar

Schieven said that if the trade war affects the US economy, she expects Trump will not fulfill his tariff threats. She said, "The more he wants to do this, the faster other countries in the world will question the role of the US dollar. Gold is still the only true substitute for the US dollar

However, not all analysts are optimistic that gold will become the winner of the global trade war. Ricardo Evangelista, a senior analyst at ActivTrades, stated that any factors that may affect the Federal Reserve's easing cycle could put pressure on gold.

He said, "The incoming Trump administration may trigger a trade war that reignites inflation, coupled with the strong performance of the US economy, further strengthening people's expectations that the Federal Reserve will slow down the pace of interest rate cuts

Daily chart of spot gold