This week, the silver market experienced significant volatility, with XAG/USD initially dropping to around $74, marking a decline of roughly 15% since the onset of the Iran war in late February [1]. The decline was attributed to a chain reaction: the closure of the Strait of Hormuz led to an energy shock, persistent inflation, a frozen Federal Reserve, elevated real yields, and subsequent pressure on non-yielding assets like silver [1].
Midweek, the market reversed sharply after reports confirmed that the Trump administration had passed a one-page peace proposal to Tehran via Pakistani mediators, signaling a formal end to hostilities and a gradual reopening of the Strait of Hormuz [1]. This news caused Brent crude to drop sharply and silver to rally from $75 to above $82 in just two sessions [1]. However, renewed US-Iranian exchanges of fire near the Strait on Friday, despite US Central Command's assertion of "no escalation," led to a pullback, with silver closing near $80.30 [1].
The release of April nonfarm payrolls added to the market dynamics. Payrolls came in at 115,000, well above the consensus of 62,000, which would typically be dollar-bullish and silver-bearish [1]. However, average hourly earnings grew only 0.2% month-on-month and 3.6% year-on-year, both below estimates, suggesting softer wage inflation and reducing pressure for a hawkish Fed stance. This supported a weaker dollar and helped silver hold its gains [1].
Silver outperformed gold this week, gaining 7% compared to gold's 2% rise, and closing the gold/silver ratio at 58, indicating a rotation toward silver as investors favored the higher-beta industrial-monetary metal over the traditional safe haven [1]. COMEX managed money positioning remains well below January extremes, suggesting the market is not crowded and may be set up for a more durable recovery [1]. Technically, silver remains in a strong long-term uptrend, with price staying well above the 200 SMA at $63.70 throughout the recent volatility, reinforcing the structural bull market floor [1].
CONCLUSION
Silver saw a dramatic 7% weekly gain, driven by geopolitical developments and supportive US jobs data. The market remains technically strong, with positioning suggesting potential for further recovery. Investors are rotating into silver, reflecting confidence in its industrial and monetary appeal.