Gold and Silver Price Forecast: Strong Upside Potential Following Inauguration

With U.S. markets closed on Monday, January 20th, for Martin Luther King Jr. holiday and Trump’s inauguration, traders are positioning themselves ahead of the long weekend. Gold is experiencing a rally as investors hedge against potential market fluctuations.

If Trump’s statements or actions spark market panic, gold could quickly climb toward $3,000. However, if the market reopens next Tuesday without significant disruption, gold may backpedal as uncertainty fades.

Meanwhile, concerns over possible Chinese tariffs are driving premiums for physical silver. Bars sourced from China could face tariffs of up to 25%, possibly triggering a rush to cover paper shorts in February sparking a potential short squeeze.

Silver Premiums and EFP Insights

About a week ago, Bob Coleman shared the chart below, highlighting an important observation: multi-dollar price spikes in silver often coincide with a rise in physical premiums (blue line). Recently, premiums surged to around $0.65, similar to 2020, when silver rocketed from $15.00 to $30.00.

Currently, premiums have jumped without a corresponding rise in silver. Maybe it stays that way, but if silver breaks above $33.00, that could change, and a post-Trump inauguration breakout above $36.00 could trigger significant short covering.

Gold Sentiment: Market Expectations

Gold is nearing its all-time high, but sentiment remains muted. Google searches for “gold price” are currently at 52, a far cry from the 88 seen in April 2024 when gold prices spiked to $2,450. This low sentiment suggests room for further gains, particularly if gold manages to breach the $2,800 mark.

Market Outlook and Key Indicators

Gold

While the current rally may be driven by hedging ahead of Trump’s inauguration, if gold continues to rise post-inauguration, it could quickly approach $3,000. A dip below $2,700, however, would likely lead to consolidation.

Silver

Silver is in a potentially explosive setup. If prices break above $33.00 and continue higher, it could signal a significant bullish trend, and a move past $36.00 might trigger a short squeeze. However, falling below $31.00 would shift the market to neutral.

GDX (Gold Miners)

The outlook for miners remains positive as long as prices stay above $36.19. A breakout above $37.30 could signal further upside momentum.

GDXJ (Junior Miners)

Junior miners need to rally above the cycle downtrend line for a breakout confirmation. A dip below the 200-day moving average would signal more consolidation.

SILJ (Silver Juniors)

Silver juniors have seen lackluster performance. A sustained move above $11.20 could signal a stronger upside move.

Final Thoughts

In my view, gold confirmed a multi-year breakout in 2024, much like the one in 2005. Going forward, I expect the surprises to lean toward the upside. I believe silver and miners have the potential to outperform gold in 2025, after years of stagnation.

AG Thorson is a registered CMT and an expert in technical analysis. For more price predictions and daily market commentary, consider subscribing at www.GoldPredict.com.