Silver rose to about $74.75 in early European trading on Wednesday, up 1.90% on the day, after moving back above $74.50. Demand increased amid tensions between the US and Iran.
Iran’s Foreign Minister Abbas Araqchi said on Tuesday that the US and Iran agreed on main “guiding principles” in talks on their nuclear dispute, but said a deal is not imminent. US President Donald Trump said Iran will make a deal and warned of consequences if issues are not resolved.
Us Iran Tensions Lift Silver
US inflation data did not shift near-term expectations for Federal Reserve rate cuts, which can limit gains in non-yielding assets such as silver. US headline inflation fell to 2.4% year on year in January from 2.7% in December, while core CPI rose 2.5% versus 2.6% previously.
Markets focus on the FOMC minutes from the January meeting on Wednesday, after the Fed held rates at 3.50%–3.75%. US markets are also reopening after an extended weekend, which may lift volatility.
On the daily chart, XAG/USD was at $73.68, with the 20-day EMA at $83.30 and RSI (14) at 42.17. Price remains below the EMA, and momentum remains below the midline.
Looking back at the market in early 2025, we saw silver prices surge past $74, largely driven by the safe-haven demand from US-Iran tensions. That situation provided significant upward momentum, even as technical indicators suggested weakness. As of today, February 18, 2026, much of that geopolitical risk has subsided, and the market dynamics have shifted considerably.
Volatility And Strategy Outlook
The dovish Federal Reserve expectations we monitored last year did materialize, with two subsequent rate cuts bringing the federal funds rate down to its current range of 2.75%-3.00%. This was a response to inflation cooling steadily, with the most recent January CPI report showing a manageable 2.1% annual increase. This macroeconomic backdrop has removed a key pillar of support for non-yielding assets compared to a year ago.
For derivative traders, this has translated into a notable drop in market volatility. The Cboe Silver ETF Volatility Index (VXSLV), which peaked above 40 during the geopolitical flare-ups in 2025, is now trading near a more subdued level of 28. This means option premiums are significantly cheaper, making it less costly to establish positions but also offering lower returns for premium sellers.
Given that silver is now trading in a more consolidated range around $65, we believe the sharp upward moves are behind us for now. Selling out-of-the-money call spreads could be an effective strategy to generate income over the coming weeks. This approach capitalizes on the lower volatility and the view that silver will struggle to retest its 2025 highs without a new major catalyst.
We must also consider the fundamental demand picture, which looks very different from last year. Recent data from the Silver Institute shows industrial demand, particularly from the solar and electric vehicle sectors, consumed a record 654 million ounces in 2025. Therefore, we should use some of the premium collected from selling calls to purchase long-dated, out-of-the-money puts to protect against a potential downturn if industrial activity unexpectedly slows.
