Silver price will rise to 30.648 by Trump’s inauguration

Silver price is recovering after recent fall caused by the release of US labor statistics. The price is being pushed higher due to a weaker dollar and inflationary concerns regarding the expected trade tariffs by the administration of Trump, who will be inaugurated on January 20. The concerns have a significant impact on expectations about the Fed's monetary policy, which in turn leads to lower government bond yields and a weaker dollar.

The strong US employment statistics released on Friday strengthened the dollar and pushed down silver prices. However, the losses were limited by uncertainty surrounding Trump’s presidency and underlying demand for safe-haven assets. Potential trade wars and tariff inflation are creating the conditions for silver to grow further as a safe-haven asset and diversifier. In volatile markets, silver is increasingly seen as a defensive asset by investors. 

The market is awaiting the release of consumer price index (CPI) on Wednesday. The index for December is forecast to reach 2.9% (compared to 2.7% in November). Given that the previously released Producer Price Index (PPI) fell below expectations, it is likely that the CPI will also be equal to or less than the estimations. This, in turn, could lead to a weaker dollar and higher silver prices as investors will expect monetary policy easing from the Federal Reserve.

According to the technical analysis, the bearish sentiment has been prevalent in the market since January 13. The Stochastic Oscillator indicates that the decline in silver price may be short term. The decline will decelerate followed by a short-term stabilization before the movement starts again. Given the current trends, the silver price is likely to rise before the inauguration of the new US President. It will create additional opportunities for investors.

Suggested options for trading: 

Buy silver at the current price. Take profit – 30.648. Stop loss – 29.401.