Silver prices rose to about $76.55 during the Asian trading session on Tuesday. This increase is due to a surge in demand for safe-haven assets following US actions against Venezuela’s President, Nicolas Maduro. The situation is aggravated by US President Trump’s warning of possible military action in Venezuela. This legal and geopolitical tension is affecting the markets, especially with Silver trading positively around $76.55.

US Interest Rate Expectations

Expectations of US interest rate cuts may further influence Silver prices. Financial markets anticipate two quarter-point reductions from the US Federal Reserve by 2026, which could help the non-yielding precious metal. Traders are also looking ahead to the US jobs report coming out this Friday. An expected increase of 55,000 Nonfarm Payrolls and a slight dip in unemployment to 4.5% could impact Fed policies and the strength of the US Dollar. WTI Oil is a high-quality Crude Oil sourced in the US and is heavily influenced by supply, demand, and geopolitical factors. Weekly inventory reports from the API and EIA affect prices, with inventory drops signifying higher demand. OPEC’s production decisions, particularly quota changes, can also sway WTI Oil prices. The recent US military action in Venezuela has created significant market uncertainty, leading to a flight-to-safety trend. We see this reflected in Silver’s rise above $76.50 as traders seek safe-haven assets. In the upcoming weeks, we anticipate volatility as a key theme, with derivatives being the best way to navigate this environment.

Trading Strategies Amid Geopolitical Risks

The initial rise in Silver suggests that traders might consider buying call options to take advantage of a potential escalation. Implied volatility for silver options has reached a 6-month high, hitting 32% this morning, indicating larger-than-usual price swings. This strategy reduces risk while allowing for upside potential driven by geopolitical concerns. However, a more significant focus is on crude oil. Venezuela, an OPEC member, had increased production to nearly 950,000 barrels per day by the end of 2025, and that supply is now at risk. Recall that oil prices spiked over 15% within days during the initial phase of the Middle East conflict in 2023, and we could see a similar effect on WTI prices. These geopolitical risks come at a time when the market is already tightening. The latest EIA report showed an unexpected drop of 3.1 million barrels in US crude inventories last week. We believe taking long positions in WTI futures or buying call spreads on crude is a wise strategy to prepare for a potential supply shock. A rise towards $100 per barrel is plausible if US military involvement increases. We should also keep an eye on this Friday’s US jobs report, which could counter the commodity rally. Although markets are forecasting Fed rate cuts for 2026, a strong jobs number significantly above the anticipated 55,000 could boost the US Dollar. This would pose challenges for both silver and oil, possibly leading to better entry points or reasons to take profits. Create your live VT Markets account and start trading now.

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