This week, the silver market experienced significant volatility, with XAG/USD initially trading near $74, down approximately 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]. However, midweek developments shifted the market. On Wednesday, reports confirmed that the Trump administration had passed a one-page peace proposal through Pakistani mediators to Tehran, signaling a formal end to hostilities and a gradual reopening of the Strait of Hormuz [1]. This news triggered a sharp drop in Brent crude prices and propelled silver from $75 to above $82 in just two sessions [1].
By Friday, renewed US-Iranian exchanges of fire near the Strait, including the transit of guided missile destroyers, complicated the outlook. Despite US Central Command's statement of 'no escalation,' silver pulled back and closed near $80.30 [1]. The release of April nonfarm payrolls added another layer to the market's reaction: payrolls came in at 115,000, well above the consensus of 62,000, which is typically 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 on the Federal Reserve to maintain a hawkish stance. This led to a weaker dollar and helped silver hold its gains [1].
Silver outperformed gold this week, with a 7% weekly gain compared to gold's roughly 2% rise, closing near $4,720 [1]. The gold/silver ratio compressed to 58, indicating that silver is outrunning gold and signaling a rotation toward the higher-beta industrial-monetary metal rather than just a safe haven [1]. COMEX managed money positioning remains well below January extremes, suggesting the market is not crowded and is potentially set up for a more durable recovery [1]. Technically, silver reclaimed a key level and remains in a strong long-term uptrend, consolidating above the 200 SMA at $63.70 throughout the recent selloff, which is seen as constructive for the market's structure [1].
CONCLUSION
Silver posted a robust 7% weekly gain, outpacing gold amid easing Middle East tensions and supportive US wage data. The market's technical and positioning backdrop suggests potential for a durable recovery, with investors rotating toward silver as both an industrial and monetary asset.