On Friday, risk assets broadly advanced amid optimistic signs emerging in the Middle East situation. Spot silver rose 3.27% to $80.9822 per ounce, accumulating a weekly gain of 6.74% after climbing consistently from $72.6369 to $83.0538. COMEX silver futures increased by 3.09% to $81.720 per ounce, marking a 6.04% weekly rise, with prices fluctuating between $73.175 and $83.835.
Analysts noted that after significantly lagging behind the broader rebound in risk assets, silver is now breaking through key price levels, showing early signs of recovery in positioning, fund flows, and volatility. What began as a technical breakout is increasingly aligning with a broader cross-asset shift—characterized by returning risk appetite, declining volatility, and a resurgence in speculative sentiment.
Silver's breakthrough of the $80 mark accelerated following news of the Strait of Hormuz reopening, enabling it to surpass the critical resistance level. This breakout not only pushed silver prices well above the previous downtrend line but also allowed them to reclaim the 50-day moving average.
Earlier this year, silver transitioned into a barometer for risk appetite. If this trend continues, some capital may rotate into the metal. Charts reveal a significant divergence between the Nasdaq 100 Index and silver.
Positioning remains extremely light, though weekly changes in silver ETF holdings are beginning to show signs of life, despite overall positions remaining quite thin.
The last significant decline in the VIX coincided with the start of a major short squeeze in silver. While the current situation is not identical, the prevailing environment of rising risk appetite and receding fear could spread and trigger a new wave of chasing in assets like silver.
The recent sharp retreat in the bond market's fear gauge, the MOVE index, has had ripple effects across multiple asset classes, including silver. Charts illustrate the comparative movement between silver and the inverse of the MOVE index.
The silver volatility index, VXSLV, has retreated from its panic-induced highs but remains elevated from a longer-term perspective. If a short squeeze intensifies, call option buying could surge, providing support for volatility.
Speculative sentiment is reigniting. Silver and South Korea's KOSPI index once exhibited similar speculative characteristics, with bubbles in both bursting rapidly—yet speculative trading in Korean equities has already made a comeback. Silver remains a core raw material for AI infrastructure development. While AI-related stocks recently experienced a short squeeze, silver currently trails far behind.
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