Silver prices climbed to about $92.65 during Monday’s Asian session, driven by safe-haven demand and rising industrial use. The possible trade conflict with Europe may boost silver’s attractiveness after President Trump’s proposed tariffs on European countries. Industrial applications, particularly in solar panels and electric vehicles, significantly contribute to higher silver prices, with industry accounting for over half of global demand. However, potential decisions by the Federal Reserve could affect the US Dollar and create challenges for silver’s price since it’s tied to the dollar. Various factors, like geopolitical tensions, interest rates, and USD performance, also influence silver prices. Generally, lower interest rates and a weaker USD boost silver’s value, whereas its greater abundance compared to gold affects pricing dynamics. The demand and price of silver are heavily influenced by industrial sectors in the US, China, and India. Silver’s market trends often follow gold’s, with the Gold/Silver ratio offering insights into their relative values. Investors can use this ratio to determine if silver or gold is undervalued. Although silver is not as popular as gold for investment, it’s valued for portfolio diversification and as a hedge against inflation. Many investors trade physical silver or through financial products, such as ETFs. With silver surpassing $92.50, the main driver appears to be geopolitical tension from the new US tariff threats against Europe. This rush for safe-haven assets suggests that buying near-term call options could be wise to capture further gains. However, we must keep an eye out for any signs of easing tensions, as that could quickly reverse these gains. We cannot overlook the strong underlying support from industrial use, which provides a solid foundation for prices. In the past, industrial demand reached a record of 632 million ounces in 2025, fueled by extensive investment in solar and EV infrastructure. This steady demand implies that any price drops could be regarded as long-term buying opportunities for those with a longer investment outlook. On the downside, the market is currently discounting expected Fed rate cuts, which could strengthen the US dollar and limit silver’s rally. This tension between safe-haven investments and strict monetary policy adds uncertainty and may increase price volatility. Traders might explore strategies for large price movements, like long straddles, to manage this unpredictable environment. We are also monitoring the gold-to-silver ratio, which has likely shrunk due to silver’s recent strong performance. Historically, this ratio averages between 60:1 and 70:1, but it surged above 85:1 back in 2025. A ratio that declines too much could indicate silver is overextended compared to gold, suggesting a possible pullback. Given these mixed signals, traders with profitable long futures positions should consider safeguarding their gains. Purchasing out-of-the-money put options can effectively hedge against a sudden price reversal caused by a stronger dollar or easing trade tensions. This approach allows continued participation in potential gains while defining downside risk.

here to set up a live account on VT Markets now