Silver (XAG\/USD) traded near $73.10 in Asian trading on Friday, staying below recent levels after volatile moves. The price was pressured by a stronger US Dollar, which can make dollar-priced silver more expensive for buyers using other currencies.<\/p>\n
Trading was expected to be quieter because of the Good Friday holiday. Silver also faced headwinds from expectations that central banks could keep policy tighter into 2026, which tends to reduce demand for assets that do not pay interest.<\/p>\n
Energy prices rose amid Middle East tensions, adding to inflation worries and supporting a tighter policy outlook. US President Donald Trump gave no details on reopening the Strait of Hormuz and warned of increased military action over the next two to three weeks, alongside threats against Iran.<\/p>\n
Iran\u2019s Foreign Minister Abbas Araghchi said recent US strikes on civilian infrastructure would not force Iran to retreat. He described the strikes as evidence of an opponent in disarray and moral decline.<\/p>\n
Chicago Fed President Austan Goolsbee said rising oil prices could make it harder to bring down inflation, especially if petrol costs lift inflation expectations. Dallas Fed President Lorie Logan backed holding rates steady at the latest FOMC meeting, saying the labour market has stabilised since late 2025, while payroll growth remains weak and \u201cuncomfortable.\u201d<\/p>\n
With the US Dollar Index (DXY) climbing to an 18-month high of 107.50, we see continued pressure on silver prices. This dollar strength makes the metal more expensive for holders of other currencies, which directly impacts demand. Therefore, positioning for further downside in XAG\/USD through put options or by shorting futures contracts appears prudent for the coming weeks.<\/p>\n
The latest March Consumer Price Index (CPI) reading, coming in hotter than expected at 3.9%, solidifies our view that central banks will remain hawkish. This environment reduces the appeal of holding non-yielding assets like silver when cash or bonds offer a more attractive return. We anticipate this dynamic will keep a firm lid on any potential rallies.<\/p>\n
Geopolitical tensions are pushing Brent crude above $110 per barrel, but this is currently strengthening the dollar more than it is helping silver as a safe-haven. With the CBOE Silver ETF Volatility Index (VXSLV) having surged 15% recently, we believe option straddles could be an effective strategy. This position would profit from a sharp price move in either direction, which seems likely given the President’s warnings of military action.<\/p>\n
Even with the weaker labor market, which we have seen since late 2025 with job growth averaging only 95,000 per month this quarter, the Fed’s focus remains squarely on inflation. This suggests policymakers are willing to accept a softer labor market to ensure price stability. Such a stance is fundamentally bearish for precious metals.<\/p>\n
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