Silver (XAG/USD) rose for a second session and traded near $78.00 per troy ounce during Asian hours on Thursday. Demand for safe-haven assets increased amid tensions between the US and Iran.
US-Iran talks remained unresolved, while Tehran reported a “general agreement” on a framework for a possible nuclear deal. US officials said Iran had not met US red lines, and the US kept military action as an option.
Geopolitical Risk Supports Safe Haven Demand
Ukraine and Russia ended two days of peace talks in Geneva without progress, as the four-year war continued. Fighting included strikes on energy infrastructure and further advances on the battlefield.
Silver’s upside in US dollars may be limited by a firm US Dollar after hawkish Federal Reserve signals. Higher US yields can raise the cost of holding non-yielding assets such as silver and can reduce demand outside the US.
Minutes from the Federal Open Market Committee’s January meeting renewed talk of possible rate hikes if inflation stays high. Most policymakers backed holding rates steady, a few supported a cut, and traders still expected two 25 basis point cuts before year-end.
Silver is traded as a store of value and for diversification, and it can be bought as bullion or via exchange traded funds. Prices can also be affected by industrial use in electronics and solar, supply and recycling, and by moves in gold and the gold/silver ratio.
Market Forces In Conflict
We are seeing a clear tug-of-war in the silver market right now. Geopolitical tensions in the Middle East and Eastern Europe are fueling strong safe-haven bids, pushing the price toward multi-year highs. However, the Federal Reserve’s firm stance against inflation is strengthening the dollar and keeping a lid on how high prices can go.
With US-Iran tensions escalating, we’ve seen Brent crude futures spike over $110 a barrel this week, the first time since the supply shocks of late 2024. This kind of instability suggests that any direct conflict could send silver prices sharply higher from the current $78 level. Traders might consider buying out-of-the-money call options to profit from a sudden price surge while limiting their downside risk.
On the other hand, the strong dollar remains a major headwind, especially after last week’s Core PCE inflation data for January 2026 came in at a stubborn 3.1%. This data supports the Fed’s “higher for longer” narrative, which could boost Treasury yields and pull silver down from these elevated levels. Buying put options or setting up collars could be a way to protect gains against a reversal if Fed policy outweighs war fears.
These conflicting signals have pushed implied volatility on silver options to levels we haven’t seen in over a year. The CBOE’s Silver Volatility Index (VXSLV) is currently trading above 45, indicating the market expects large price swings in the coming weeks. For traders, this high volatility makes strategies like straddles or strangles interesting, as they profit from a significant price move in either direction.
We should also watch the Gold/Silver ratio, which has recently compressed to around 65:1, well below the 20-year average of about 75:1. This suggests silver might be getting expensive relative to gold, a change from what we saw for most of 2025. This could be driven by strong industrial demand, as global solar panel installations in 2025 reportedly grew by another 20%, pulling significant physical supply from the market.
