Silver (XAG/USD) rose for a second straight session and traded near $78.00 per troy ounce during Asian hours on Thursday. Demand for safe-haven assets increased as tensions between the US and Iran grew.
US-Iran talks are still unresolved, even as Tehran reported a “general agreement” on a framework for a possible nuclear deal. US officials said Iran has not met US red lines, and the US continues to keep military action on the table.
Geopolitical Risk Supports Safe Haven Demand
Ukraine and Russia ended two days of peace talks in Geneva without progress, as the four-year war continued. The fighting included strikes on energy infrastructure and further advances on the battlefield.
Silver’s gains in US dollars may be capped by a stronger US Dollar after hawkish signals from the Federal Reserve. Higher US yields increase the cost of holding non-yielding assets like silver and can also weaken demand from buyers outside the US.
Minutes from the Federal Open Market Committee’s January meeting revived concerns about possible rate hikes if inflation stays high. Most policymakers supported keeping rates steady, a few favored a cut, and traders still expected two 25 basis point cuts before year-end.
Silver is often used as a store of value and a diversification tool. Investors can buy it as bullion or through exchange-traded funds. Prices can also move due to industrial demand (especially electronics and solar), mining supply and recycling, and shifts in gold prices and the gold/silver ratio.
Market Forces In Conflict
Silver is being pulled in two directions right now. Tensions in the Middle East and Eastern Europe are driving safe-haven buying and pushing prices toward multi-year highs. At the same time, the Federal Reserve’s tough stance on inflation is lifting the dollar and limiting how far silver can rise.
As US-Iran tensions increase, Brent crude futures jumped above $110 a barrel this week, the first time since the supply shocks in late 2024. This kind of instability suggests that any direct conflict could send silver sharply higher from the current $78 level. Traders may consider buying out-of-the-money call options to benefit from a sudden spike while keeping downside risk limited.
However, the strong dollar remains a major headwind, especially after last week’s Core PCE inflation data for January 2026 came in at a stubborn 3.1%. This supports the Fed’s “higher for longer” view, which could push Treasury yields up and pull silver down from current levels. Buying put options or using collars may help protect gains if Fed policy starts to outweigh war-related fears.
These mixed signals have pushed implied volatility in silver options to the highest levels in more than a year. The CBOE’s Silver Volatility Index (VXSLV) is now above 45, which suggests the market expects big price swings in the coming weeks. With volatility this high, strategies like straddles or strangles may appeal to traders who want to profit from a large move in either direction.
It is also worth watching the Gold/Silver ratio, which has recently narrowed to about 65:1, well below the 20-year average near 75:1. This suggests silver may be expensive relative to gold, a shift from most of 2025. One reason could be strong industrial demand: global solar panel installations in 2025 reportedly rose another 20%, drawing more physical supply out of the market.
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