Gold and Silver Retract Ahead of Trump Inauguration

 

Precious Metals Retreat Ahead of Trump Inauguration 

(Bullion News Network) – Gold and silver prices retracted to end the week after a strong midweek run. Gold lost moderately, shedding $10.66 by market close while remaining elevated above the $2,700/ozt line. Silver’s losses were more dramatic; The metal’s spot price dropped $0.40/ozt after nearly crossing the $31 line earlier this morning. The lopsided price action has been a major story for precious metal markets this month, and today’s movements bumped the gold-silver ratio nearly one point higher to 88.82:1. Markets will close on Monday for Martin Luther King, Jr. Day, which happens to land on the same day as Donald Trump’s inauguration this year. 

Metal prices jumped at midweek after a lackluster Monday performance as markets reacted to a worse-than-expected CPI data report. Inflation remains sticky, and CME FedWatch now predicts a near-certain probability that interest rates will remain unchanged when the Federal Reserve’s FOMC meets at the end of the month. Despite the troubling inflation reading, Wall Street soared to new heights on the news and logged their best performances since the days following Trump’s reelection in November. 

Gold and silver markets could be looking at a minor consolidation ahead of Donald Trump’s inauguration. The Trump administration will inherit a slew of geopolitical and economic stressors as the former president enters his second term in office. The President-elect escalated his aggressive territorial claims to open 2025, asserting that the United States may pursue the acquisition of Greenland, the Panama Canal, and perhaps Canada during his tenure as commander-in-chief. Paired with his proposed policy of universal tariffs on imported goods, some analysts say the President’s actions may be a boon for safe haven assets like gold and silver. 

Also contributing to today’s gold and silver price movements could be the implied probability of a rate cut from the Federal Reserve. CME FedWatch now predicts only a .5% chance that the Fed will open 2025 with a 25-point rate cut. This is down from 2.1% Thursday and 3.2% one week ago. Precious metal prices in 2024 jumped as markets anticipated rate reductions, so another blow to market hopes that the Fed will start 2024 with a stimulating rate cut may have triggered a bit of profit-taking after the strong midweek performance of gold and silver. 

Traders should anticipate major price movement in the opening weeks of Mr. Trump’s second term in office. Aside from a full slate of major monetary policy changes, the President will have to contend with a range of geopolitical stressors, including active conflicts in the Middle East and the ongoing Russia-Ukraine war. The Trump administration’s response to these stressors will have a profound impact on how safe haven assets, including gold and silver, perform throughout the next four years. 

For now, both gold and silver end the week elevated from Monday’s prices but down compared to Thursday.