Silver prices dropped to about $91.80 during Thursday’s trading in Asia, a decline of 0.92%. This drop followed US President Donald Trump’s decision to back off his tariff threat regarding Greenland, which lessened the demand for safe assets like silver. The Federal Reserve is likely to keep interest rates steady for now and may do so until Chair Powell’s term ends in May. Trump’s announcement about Greenland eased earlier tensions, making safe-haven assets, such as silver, less attractive. Economists believe that the strong US Dollar will keep putting pressure on non-interest-bearing assets like silver. However, if trade tensions between the US and Europe rise again, demand for safe-haven assets like silver could increase. Silver plays an important role in industries like electronics and solar energy, which can affect its price. Additionally, silver prices often move along with gold prices, as both are seen as safe-haven investments. Key factors influencing silver’s market include interest rates, the strength of the US Dollar, and geopolitical events. With silver falling below $92.00, we view this as a short-term response to declining tensions over Greenland. The Federal Reserve’s decision to keep interest rates steady until at least May will continue to support the US Dollar, creating challenges for non-yielding assets. This sentiment is mirrored in broader markets, as the CBOE Volatility Index (VIX) fell below 14 last week for the first time in months, indicating less market fear. Given the Fed’s firm stance, traders should think about strategies to prepare for potential weaknesses in the coming weeks. Buying put options could offer downside protection, especially since profit-taking may continue after recent record highs. This caution is backed by manufacturing PMI figures from late 2025, which showed a slight dip in industrial demand following a very strong year. However, we shouldn’t overlook the uncertainty surrounding the new Greenland agreement, as key officials from Europe and the US have expressed skepticism. The market whiplash during the 2025 trade disputes reminds us how quickly sentiment can shift from one headline. This combination of a hawkish Fed and unstable geopolitics may lead to increased volatility. Implied volatility on silver options has decreased from its peak during the Greenland tariff threats but remains high compared to the calm seen in early 2025. This suggests that using option straddles or strangles could be beneficial for traders expecting a significant price shift, but unsure of the direction. Finally, we should consider the gold-to-silver ratio, now around 52, with gold priced above $4,800. This is a low historical ratio, often indicating times when silver underperforms gold. This suggests silver may be overvalued compared to gold, implying that any new investments in precious metals might lean toward gold until this ratio widens.

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