Gold and Silver prices have hit new record highs due to rising tensions between the US and Europe. More people are turning to these safe-haven investments because of fears about trade disputes and concerns over the independence of central banks. Gold has gone up by about 8% this year, while Silver has jumped by 30%. This increase is largely due to geopolitical events, such as the US arresting Venezuela’s leader and ongoing uncertainties regarding Greenland.

Impact of US Policies

The Trump administration’s criticism of the Federal Reserve has brought added volatility, raising worries about central bank independence. In this uncertain climate, Gold and Silver have become more appealing than currencies and government bonds, especially as US debt rises and policies remain unpredictable. This information comes from the FXStreet Insights Team, which includes expert opinions from the field. With record highs in gold and silver seen in 2025, volatility is now a key factor to watch. The CBOE Gold Volatility Index (GVZ) has remained high after spiking over 40% in the last quarter of 2025, which means options premiums are also high. In this situation, strategies that benefit from large price swings, like long straddles, may be more appealing than simple bets on a direction.

Geopolitical Frictions and Market Reactions

The ongoing tensions over Greenland are a major reason why precious metal prices remain strong. Historically, after quick rallies like the one we saw in 2020, gold usually goes through a consolidation phase or a sharp decline before it resumes its trend. Traders might use call spreads for potential gains while limiting risk or consider buying puts to protect against a possible price drop in the upcoming weeks. Silver’s remarkable 30% increase in 2025 brought the gold-to-silver ratio down from about 85 to nearly 65, which is a significant historical shift. This could mean that silver’s price gains are too stretched compared to gold, creating an opportunity for pairs trading. Traders can use futures contracts to buy gold while simultaneously selling silver, betting that the ratio will return to its average. Concerns about currency debasement continue to be a strong long-term factor, as the latest report from the Congressional Budget Office predicts US debt-to-GDP will exceed 110% this year. With a Federal Reserve meeting coming up next month, any suggestion of a dovish approach could further boost safe-haven demand. This supports using longer-term options, known as LEAPS, to maintain a bullish stance through any short-term volatility. Create your live VT Markets account and start trading now.

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