Silver (XAG\/USD) rose to about $94.90 in early Asian trading on Monday. Buying increased as tensions in the Middle East added uncertainty and supported demand for safe-haven assets.<\/p>\n
The move followed US and Israeli strikes on Iranian targets. US President Donald Trump said the US military would continue attacking Iran until objectives are met and said \u201cthere will likely be more American casualties\u201d.<\/p>\n
Trump also said on Sunday that Iran\u2019s supreme leader, Ayatollah Ali Khamenei, had died. He added that the US and Israel struck hundreds of targets in Iran, including Revolutionary Guard sites and air defences.<\/p>\n
The continuing strikes reduced expectations of a quick diplomatic outcome. This supported a risk-off mood that tends to benefit precious metals.<\/p>\n
In the US, a stronger-than-expected Producer Price Index (PPI) could support the US Dollar and pressure dollar-priced commodities such as silver. Markets also expect the Federal Reserve to keep interest rates unchanged at the March meeting, and the PPI data may reinforce expectations of rates staying higher for longer.<\/p>\n
With silver surging towards $94.90, we are seeing a classic clash between geopolitical fear and economic reality. The escalating conflict in the Middle East is driving a significant flight to safety, but a strong dollar fueled by inflation data is a major headwind. This extreme uncertainty suggests volatility is the main factor to trade in the coming weeks.<\/p>\n
Given the gravity of the events in Iran, we believe the immediate path of least resistance is higher, so long positions should be considered. We could look at buying call options on silver futures or related ETFs to capture further upside while defining our maximum risk. However, we must be aware that implied volatility is likely at record highs, similar to the VIX spikes seen during the 2020 pandemic, making these options very expensive.<\/p>\n
Conversely, the stronger-than-expected Producer Price Index data reminds us of the inflation fight we saw through 2023 and 2024. The Federal Reserve has a track record of holding rates high to combat inflation, which strengthens the dollar and typically pressures silver prices down. This makes buying put options a viable strategy to bet on a reversal once the initial geopolitical shock wears off.<\/p>\n
This spike to nearly double the previous all-time high from 2011 is historically significant, and we see the Gold-to-Silver ratio has likely compressed to extreme lows. We should analyze this ratio, which is currently sitting near 32, well below its five-year average of around 80. A pair trade, going long gold futures while shorting silver futures, could be a prudent way to bet on a normalization of this relationship.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Silver climbs to $94.90 as Middle East tensions spur safe-haven demand; strong US PPI boosts dollar pressure.<\/p>\n","protected":false},"author":103,"featured_media":16982,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50478","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t