Same old story. Crude oil and the U.S. dollar continue to climb, putting pressure on gold and silver.

What I find particularly interesting is that implied gold and silver EFP yields are finally moving lower along with prices, while options volatility continues to get crushed. One-Month ATM Implied Volatility Gold 19.5% Below 20% Silver 34% - Down from 100% in January Indicative levels provided from a good friend, not independently verified live quotes.

I honestly cannot remember the last time I saw one-month gold volatility trading below 20%. Meanwhile, silver implied volatility has fallen to approximately 34%, after reaching an extraordinary 100% in January.

Despite all the geopolitical uncertainty, elevated crude oil prices and questions surrounding the path of U.S. interest rates, the options market is now pricing in considerably less volatility.

The decline in EFP yields is equally interesting. With both prices and implied EFPs moving lower, it will be important to watch whether the spread between CME futures and London OTC rates continues to narrow, and what that tells us about physical flows and bank positioning. EFPs are still relatively high compared to OTC.

Lower implied volatility does not necessarily mean lower risk. With banks reportedly taking less risk and geopolitical headlines continuing to drive the market, we could still see sudden and significant intraday price moves. For now, gold and silver appear to be searching for direction. The stronger dollar and rising crude prices remain immediate headwinds, while uncertainty surrounding interest rates and the Middle East continues to cloud the near-term outlook.

I remain constructive on the longer-term fundamentals for precious metals, but patience is still important in this market.

The question is whether this decline in volatility represents a period of consolidation or simply the calm before the next major move. At one point, as vol moves lower, you may be able to scoop up some cheap calls.

Educational purposes only. Not investment advice.