Insights 
VT 
Gold reached an all-time high with spot prices peaking at $4,164/oz during early trading. The rise was driven by strong fund inflows, heightened US-China trade tensions, and the expectation of continued Federal Reserve rate cuts.
Silver also experienced a rally, extending its upward trajectory for a fifth day with prices surpassing $53/oz. This was partly due to a historic short squeeze in London.
Etf Growth In Gold Holdings
ETFs are witnessing growth in gold holdings, with inflows of 8.5koz over two consecutive sessions, bringing total known holdings to 97.5moz. Last week’s net inflows reached 240koz, marking the highest levels since September 2022.
Both gold and silver have performed exceptionally well this year, with prices increasing over 55% and 80% year-to-date. The rise is attributed to the Fed’s policy adjustments, central bank asset purchases, and geopolitical uncertainties, boosting demand for safe-haven assets.
With gold breaking $4,164/oz and silver topping $53/oz, we are seeing extreme upward momentum. This surge in volatility presents clear opportunities, but also requires careful risk management in the weeks ahead. The elevated prices make options contracts, particularly for hedging, more expensive.
Bullish Strategies Remain In Focus
Given the strong ETF inflows and expectations of continued Federal Reserve rate cuts, bullish strategies remain in focus. Traders should consider using call options to capitalize on further gains while limiting downside risk. The persistence of geopolitical tensions and strong central bank buying provides a solid floor for these positions.
However, after such a rapid climb—gold is up over 55% this year—the risk of a sharp pullback is significant. We should look at buying put options or establishing bear put spreads to protect existing long positions or to profit from a potential short-term correction. This is especially true as markets can become overextended on speculative buying.
Recent data shows the CBOE Gold Volatility Index (GVZ) has surged to 29.5, a level we haven’t seen since the banking sector instability back in early 2024. This high implied volatility suggests traders are pricing in large price swings in the near future. It makes selling options, such as covered calls on physical holdings, an increasingly attractive strategy to generate income.
We are seeing investment flows that are reminiscent of the massive safe-haven rush during the 2020 pandemic. That period, as we recall, was followed by a multi-month consolidation phase once the initial drivers cooled off. History suggests that while the long-term trend is strong, a period of stabilization or a downturn is highly probable after such a vertical move.
For silver, the situation is even more intense due to the historic short squeeze dynamics. This makes it particularly vulnerable to a violent reversal once the buying pressure from traders covering their shorts is exhausted. The gold-silver ratio has tightened to 78, but this is still high compared to historical bull market peaks, suggesting silver’s rally could be less fundamentally secure than gold’s.
