Trade rates and the demand for a safe port of inflation.
The proposed rates of Trump for car import, semiconductors, medicines and wood stimulate the volatility of the market and inflation fears. With new tasks on top of existing rates for Chinese import, steel and aluminum, companies are braced for possible disruptions of the supply chain. This policy has stimulated the demand for hard assets such as silver, which investors often use to cover themselves against inflation and devaluation of currency.
Inflation data remains a central point for traders. The consumer price index (CPI) for January showed a higher than expected monthly increase of 0.5%, with the annual rate climbing to 3%-the highest since June. The preferred measure of the Federal Reserve, the price index of the personal consumption expenditure (PCE), is expected to be less serious, but the uncertainty surrounding the central bank’s policy path will continue to exist.
FED Policy and Economic Signals under control
The Federal Reserve maintained interest rates at 4.25% -4.50% in its last meeting, warning for caution because inflation risks that are linked to Trump’s rates remain a concern. With the FED that shows the reluctance to lower the rates, the attraction of non-return such as silver remains robust. The upcoming data releases of the Central Bank, including the PCE index and consumer confidence, can influence market sentiment.
Chicago Fed President Austan Goolsbee noted that although inflation has decreased from the highlights of 2022, new rates could introduce new supply shocks that are reminiscent of those who are seen during the COVID-19 Pandemie. Market participants also keep close to developments in the Peace Messages of the US and Russia and the outcome of German elections, which can influence global financial markets.