Silver has seen a sharp drop following forced liquidations due to high volatility in precious metals markets. The strengthening US Dollar and rising Treasury yields, especially after President Trump nominated Kevin Warsh, have added further pressure. However, despite this decline, Silver is still on track for a strong monthly performance. Silver (XAG/USD) has faced heavy selling, dropping significantly after reaching record highs. The price fell to $102.20, down 12.30% from a peak of $121.66. During the European session, it dipped to an intraday low of $95.08 before stabilizing above $100. The US Dollar’s strength and rising Treasury yields, influenced by Warsh’s nomination, directly affect Silver prices. Warsh’s likely focus on inflation suggests a tighter Federal Reserve, increasing the cost of holding non-yielding assets like Silver. While the market is in a consolidation phase, Silver is still expected to perform well this month. This outlook is supported by safe-haven demand due to geopolitical tensions in the Middle East and uncertainties about global growth and US monetary policy. We recall the sharp correction in Silver prices back in 2025, when prices dropped from over $121 to below $100 within a day. This was driven by forced liquidations and concerns over Warsh’s Fed nomination. The market today, on January 30, 2026, presents different conditions for derivative traders. With the extreme volatility of 2025 behind us, implied volatility on Silver options is now more manageable. This makes selling out-of-the-money puts a smart strategy for earning premiums, especially as prices hover around $105. It allows us to take advantage of the lower likelihood of a similar sell-off in the near future. The fundamental outlook for Silver has improved significantly since the fears of a hawkish Fed. Industrial demand hit a record high in 2025, reaching 690 million ounces, driven mainly by strong growth in solar and electric vehicle production. This robust industrial use helps keep prices stable, reducing risks for put sellers. On the supply side, conditions remain tight, leading to a significant structural deficit. Global demand has outpaced total supply for three consecutive years, with a reported deficit of over 140 million ounces in 2025. This ongoing shortfall will continue to uplift Silver prices. The Gold/Silver ratio is also noteworthy, currently around 85:1, well above the 20th-century average of roughly 50:1. This suggests Silver may still be undervalued compared to Gold. A viable strategy is to go long on Silver futures while shorting Gold futures, betting on a narrowing of this ratio in the coming weeks. Unlike the environment that triggered the 2025 sell-off, the current interest rate outlook is much more stable. With the 10-year Treasury yield steady at around 3.8%, the cost of holding a non-yielding asset like Silver is less concerning now. This is a sharp contrast to the panic caused by rising yields during Warsh’s nomination news.

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