Silver prices fell to around $93.60 in early Asian trading on Tuesday as traders took profits after hitting a record high. However, demand for safe-haven assets may limit further losses for silver despite these recent drops. US President Donald Trump introduced a 10% import tariff on goods from several European countries. This has increased interest in traditional safe-haven assets and could support silver prices during ongoing trade tensions. The US Federal Reserve is expected to keep interest rates steady at its January meeting. Markets show only a 5% chance of a rate cut, and stable rates can strengthen the US Dollar, which affects non-yielding assets like silver. WTI Oil, or West Texas Intermediate, is a benchmark for high-quality, low-sulfur crude oil. Its price is affected by global supply and demand, geopolitical events, the US Dollar’s value, and inventory reports from the API and EIA. OPEC’s production decisions also impact WTI prices. Lower quotas can reduce supply and raise prices, while higher quotas can do the opposite. OPEC+ includes non-OPEC members that can influence these decisions. Silver recently pulled back to around $93.50 as traders took profits after a strong rally. This profit-taking is common after significant price increases. The main question now is whether this dip presents a buying opportunity or signals a larger correction. The strength of silver is currently supported by geopolitical tensions, particularly the new tariffs on several EU countries. This has led to rising safe-haven demand, providing a solid price floor for now. In the options market, implied volatility for silver, tracked by the CBOE Silver ETF Volatility Index (VXSLV), surged over 15% in the last week to 38.2, suggesting traders expect larger price changes. On the other hand, the US Federal Reserve’s firm stance to keep interest rates steady later this month could strengthen the US Dollar, making non-yielding assets like silver less appealing. This scenario is reminiscent of late 2025, when tough comments from the Fed briefly capped a precious metals rally, highlighting how sensitive this market is to monetary policy. For derivative traders, this environment suggests focusing on volatility rather than just price direction. With high implied volatility, selling premium using strategies like iron condors or credit spreads could be beneficial if silver trades within a range. These strategies can profit from price stability and the passage of time, especially when the market faces strong opposing forces. Key data to watch include the upcoming weekly jobless claims and, crucially, the Fed’s policy decision at the end of the month. Open interest in COMEX silver futures has reached its highest level in six months at over 175,000 contracts, indicating significant new capital is entering the market. This high level of participation suggests that any price movement could be sharp and decisive.

here to set up a live account on VT Markets now