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Metals

Gold Silver: Major Factors That Could Impact Implied Volatility and Skew in 2025

03 Dec 2024

Gold and silver made significant moves in 2024, with the yellow metal hitting an all-time high of over $2,800 in November, while silver rose to its highest levels since 2013 (Figure 1). However, if one looked at the overall level of implied volatility on gold and silver options, one might not have guessed the scale of the price moves. Neither gold nor silver options implied volatility changed much in 2024, as indicated by CME Group’s comprehensive CVOL measure (Figures 2 and 3). That said, implied volatility did fall sharply for both metals during the post-election price correction.

Figure 1: Gold rallied to a record and silver to multi-year highs pre-election

Figure 1: Gold rallied to a record and silver to multi-year highs pre-election
Source: Bloomberg Professional (GOLDS and XAG)

Figure 2: Gold implied volatility has been at average to somewhat low levels thus far in 2024

Figure 2: Gold implied volatility has been at average to somewhat low levels thus far in 2024
Source: QuikStrike (Gold CVOL, OG_30D_ATM_Vol Pre-October 2013) and CME Economics Research Calculations

Figure 3: Implied volatility on silver futures options has also been at moderate levels

Figure 4: The post-election correction in gold prices has taken the skew back towards neutral

Figure 5: The post-election decline in silver prices also dampened silver’s normally positive skew

Rate expectations

Figure 6: Gold and silver correlated negatively with changes in Fed rate expectations

Figure 7: Fed rate expectations have been very volatile for the past three years

The U.S. Dollar, Tariffs and Sanctions

Figure 8: Central banks have been net buyers of gold since 2008

Figure 9: Gold and silver have a strong negative correlation to BBDXY, which has been strong recently

Trading gold and silver

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