Silver prices have fallen from a record high of nearly $94 to around $91.70 per ounce, showing a decline of 1.70%. This drop comes after a brief spike in demand for safe-haven assets, which was driven by decreased geopolitical tensions and profit-taking. Comments from US President Trump about reduced tensions with Iran have eased fears of military conflict, leading to less demand for safe-haven assets like silver. Additionally, strong economic data from the US supports the dollar, hindering silver’s potential gains, as it does not generate yield.

Trade Tensions Eased

The absence of new US tariffs on mineral imports has further reduced trade tensions, decreasing the appeal of silver as a defensive asset. Despite this adjustment, analysts believe the medium-term outlook is stable, thanks to factors like supply shortages and strong industrial demand. Silver acts as a store of value, a medium of exchange, and a potential hedge against inflation, attracting those aiming to diversify their portfolios. Its prices are affected by geopolitical events, interest rates, dollar movement, investment demand, and industrial use. Silver often follows gold’s price trends, and investors keep an eye on the gold/silver ratio to gauge their relative values. With the recent drop from the nearly $94 peak, we are seeing more short-term volatility, creating opportunities for traders. The current dip to around $91.70 seems to result from profit-taking and temporary easing of geopolitical tensions. This situation offers traders a chance to prepare for the next market move—whether it’s a brief correction or a shift in trend. The Federal Reserve’s tight monetary policy, supported by strong US economic performance in 2025, continues to limit potential upside for silver. Recent consumer price index (CPI) data shows persistent inflation, indicating that rate cuts are unlikely soon, which in turn bolsters the dollar. For derivative traders, this implies that buying out-of-the-money call options might be risky, but selling covered calls could be a smart way to generate income.

Potential Entry Point for Medium-Term Bullish Positions

However, the underlying situation remains strong, suggesting that this pullback could be an entry point for medium-term bullish positions. Data from late 2025 confirmed a significant market supply deficit for the fourth consecutive year, fueled by record industrial demand in sectors like solar energy and electric vehicles, which grew by over 10%. Selling cash-secured puts at lower strike prices may be a way to leverage high implied volatility while potentially acquiring silver at a discount. Historically, the gold-to-silver ratio helps provide context, and it currently stands at multi-decade lows. Looking back to the last major commodity peak in 2011, we observed a sharp drop in the ratio before silver’s price corrected. This indicates that silver may be overvalued compared to gold, and a pairs trade—buying gold while selling silver—could protect against further downward movement in silver. Given these mixed signals, derivative strategies that benefit from price movements in both directions seem promising. We recommend considering straddles or strangles as effective ways to profit from expected volatility in the next few weeks. These strategies would benefit from significant price movements, whether driven by the fundamental supply deficit pushing prices higher or restrictive monetary policy leading to a deeper correction. Create your live VT Markets account and start trading now.

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