Silver (XAG/USD) traded near $73.10 in Asian hours on Friday after volatile moves, staying in negative territory. A firmer US Dollar, supported by safe-haven demand, made dollar-priced silver more expensive for buyers using other currencies.
Trading may be quieter due to the Good Friday holiday. Silver, which pays no interest, faced pressure as markets priced in more hawkish central bank policy expectations for 2026.
Inflation Pressures Build
Higher energy prices linked to Middle East tensions added to inflation concerns. This supported tighter policy expectations and reduced demand for non-yielding precious metals.
US President Donald Trump gave no clear steps on reopening the Strait of Hormuz. He warned of intensified military action over the next two to three weeks and issued threats against Iran.
Iran’s Foreign Minister Abbas Araghchi said recent US strikes on civilian infrastructure would not force Iran to retreat. He said the strikes showed an opponent he described as in disarray and in moral decline.
Chicago Fed President Austan Goolsbee said on Thursday that rising oil prices could complicate efforts to curb inflation. He added that a surge in petrol prices could lift inflation expectations.
Policy Signals Diverge
Dallas Fed President Lorie Logan backed holding rates steady at the latest FOMC meeting. She said the labour market has stabilised since late 2025, but payroll growth remains weak and “uncomfortable.”
We see silver under pressure around $73.10 due to a strong dollar and the likelihood of hawkish central bank policy in 2026. This setup reminds us of the aggressive rate-hike cycle of 2022-2023, which initially suppressed precious metals prices. This could warrant considering bearish positions, such as buying put options, to capitalize on a potential slide in the coming weeks.
However, the severe geopolitical risk in the Strait of Hormuz presents a powerful counterforce that could send prices soaring. Looking back, we saw Brent crude oil jump over 15% in a matter of weeks during similar Middle East flare-ups in early 2024, dragging safe-haven assets like silver higher. This intense uncertainty makes long volatility strategies, like purchasing a straddle to bet on a large price move in either direction, very compelling.
The conflicting commentary from Fed officials makes upcoming economic data releases absolutely critical for direction. We must watch the next inflation and jobs reports, as a high inflation number could reinforce the Fed’s hawkish stance while a weak payroll figure could force them to reconsider. Trading short-dated options that expire around these key data releases will be an effective way to play the expected volatility spike.
This environment of high tension and policy uncertainty is driving up the price of options contracts. We saw implied volatility on silver, a key component of options pricing, surge over 40% during the banking sector stress back in the first quarter of 2023. Given the current situation, selling cash-secured puts at lower strike prices could be a viable strategy to collect this rich premium from the market’s fear.
