Commodities faced pressure today as the markets reacted to the meeting between Trump and Putin over the weekend. No major agreements emerged from the talks, leaving markets largely unchanged. Oil prices started the week lower, influenced by the Trump administration’s decision to pause secondary tariffs on Russian energy imports. During the Asia-Pacific session, gold and silver prices also dropped.

Reasons for Falling Gold and Silver Prices

The decrease in oil prices was expected due to the outcome of the meeting. However, the drop in gold and silver was less clear. The absence of new sanctions on Russian energy has pushed oil prices down. WTI crude futures have fallen below $92 a barrel, which aligns with last week’s EIA report showing an unexpected inventory increase of 2.1 million barrels. Traders might look to buy September put options targeting the $88 support level. Additionally, the pause in geopolitical tensions is soothing the market. This calmness is evident in the falling implied volatility of crude options. With reduced expected price swings, selling premium becomes an appealing strategy. Traders could think about selling out-of-the-money call spreads to profit from both the price ceiling and the drop in volatility.

Impacts of US Dollar Increase

Gold’s decline is more related to the lack of a crisis rather than the meeting itself. As the Dollar Index rises to 105.50 and last week’s July CPI data showed core inflation cooling to 2.8%, the need for gold as a safe haven or hedge against inflation has lessened. This puts pressure on gold as it tests the $2,200 per ounce mark. In this context, traders should consider strategies that benefit from stable or slightly lower prices in the near term. Selling call options with a strike price around the $2,250 resistance level could be a smart choice. This strategy allows for potential profits if gold remains steady or declines in the coming weeks. We saw similar patterns during the easing of U.S.-China trade tensions in 2019-2020, where initial relief rallies or sell-offs in commodities led to more volatile trading. This history indicates that while the initial reaction is downward, traders should stay flexible. The market is processing the news, but overall fundamentals haven’t changed drastically overnight. Create your live VT Markets account and start trading now.

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