First Majestic Soars 8.3% as Gold Sector Rallies on Fed Turmoil – What’s Next?

Summary
• First Majestic (AG) surges 8.3% intraday to $20.485, hitting 52-week high of $20.605
• Gold sector erupts as Fed independence crisis sparks safe-haven demand
• Options chain shows aggressive bullish positioning with 137.78% price change ratio on $20 call

First Majestic’s explosive 8.3% rally mirrors the gold sector’s record-breaking surge, driven by unprecedented political tensions threatening the Federal Reserve’s independence. With gold prices hitting $4,600/oz and AG trading near its 52-week high, the stock’s technicals and options activity signal a high-conviction bullish phase. Traders are now weighing whether this momentum is a short-term spike or the start of a sustained rally.

Gold Sector Volatility Driven by Fed Independence Crisis
First Majestic’s 8.3% intraday surge aligns with gold’s record-breaking $4,600/oz level, fueled by the Trump administration’s criminal investigation into Fed Chair Jerome Powell. The Fed’s independence is under direct political pressure, triggering a global flight to safe-haven assets. Gold’s 70% annual gain and silver’s 181% surge reflect systemic fears of monetary policy destabilization. AG, as a gold producer, benefits from both physical gold demand and speculative positioning in the sector.

Gold Sector Leaders Outperform as AG Surpasses NEM
Gold sector leader Newmont (NEM) rose 3.43% intraday, trailing AG’s 8.3% surge. While NEM’s 3.43% gain reflects sector-wide strength, AG’s performance suggests speculative momentum. The broader gold ETF (GLD) would likely mirror this trend, but AG’s smaller-cap profile amplifies volatility. The sector’s rally is driven by geopolitical risks (Iran, Greenland) and Fed uncertainty, creating a structural tailwind for gold producers.

Options Playbook: High-Leverage Calls and Volatility-Driven Puts for AG
• MACD: 0.9517 (bullish), Signal Line: 0.9046, Histogram: 0.0471 (rising)
• RSI: 66.83 (overbought), Bollinger Bands: $15.35–$18.73 (price above upper band)
• 200-day MA: $10.16 (far below current price)

AG’s technicals confirm a short-term bullish breakout. Key levels to watch: $19.70 (intraday low) as support and $20.605 (52-week high) as resistance. The 8.3% rally suggests continuation above $20.485, with RSI near overbought territory indicating potential pullback risks. No leveraged ETF data is available, but the options chain shows aggressive bullish positioning.

Top Call Option: AG20260116C20
• Strike: $20, Expiration: 2026-01-16, IV: 88.09%, Leverage: 19.09%, Delta: 0.6038, Theta: -0.1727, Gamma: 0.1829, Turnover: 778,956
• IV (high volatility), Leverage (high reward), Delta (moderate sensitivity), Theta (rapid time decay), Gamma (high sensitivity to price moves), Turnover (liquid)
• This call offers 19.09% leverage with high gamma, ideal for a 5% upside scenario (target $21.51). Projected payoff: $1.51/share, 7.4% return on premium.

Top Put Option: AG20260116P19.5
• Strike: $19.5, Expiration: 2026-01-16, IV: 88.76%, Leverage: 46.43%, Delta: -0.3065, Theta: -0.0198, Gamma: 0.1654, Turnover: 19,961
• IV (high volatility), Leverage (high reward), Delta (moderate bearish exposure), Theta (slow decay), Gamma (high sensitivity), Turnover (liquid)
• This put provides 46.43% leverage for a 5% downside scenario (target $19.46). Projected payoff: $0.04/share, 0.2% return on premium, but acts as a volatility hedge.

Action: Aggressive bulls should buy AG20260116C20 for 19.09% leverage into $20.605 resistance. Cautious traders may use AG20260116P19.5 as a volatility hedge. If $20.605 breaks, consider rolling into higher-strike calls.

Backtest First Majestic Stock Performance
The performance of First Majestic Silver (AG) after an 8% intraday surge from 2022 to now cannot be accurately determined due to the lack of available market data. The surge date file is missing, which is necessary for a meaningful backtest. However, using the strategy back-test engine, we can test the performance of AG under a relaxed definition of an 8% close-to-close jump from 2022 to now.1. Relaxed Definition Backtest: The backtest using the relaxed definition of an 8% close-to-close jump from 2022 to now can be conducted since the daily closes are available. This will provide insights into the strategy's performance, although it is a different signal than the original 8% intraday surge.2. Original Definition Limitations: The inability to test the original 8% intraday surge is due to the lack of intraday high price and previous-close columns in the available market data. This limitation highlights the need for complete historical data to conduct accurate backtests of intraday strategies.In conclusion, while the exact performance of AG after the 8% intraday surge from 2022 to now cannot be determined, a backtest using the relaxed definition of an 8% close-to-close jump can be conducted to assess the strategy's performance under different conditions. This highlights the importance of having complete historical data for accurate backtesting in finance

AG’s Bullish Momentum Unlikely to Subside – Position for Volatility
First Majestic’s 8.3% rally is part of a broader gold sector surge driven by Fed independence fears. With RSI near overbought and options showing aggressive bullish positioning, the move is likely to continue unless the Fed crisis de-escalates. Watch Newmont (NEM)’s 3.43% gain as a sector barometer. Investors should hold long positions in AG or use high-leverage calls like AG20260116C20 for amplified exposure. Immediate focus: $20.605 resistance and $19.70 support. Volatility is the new norm—position accordingly.