Silver rose to about $76.60 per troy ounce in early European trading on Friday after falling 11.5% in the prior session. Even so, it was set for a third straight weekly decline as volatility stayed high.
Thursday’s drop had no clear trigger, but losses in shares and cryptocurrencies pointed to broad forced selling. Trading flows linked to systematic and algorithm-based activity may have added to the move.
Inflation Data And Fed Expectations
Markets are focused on upcoming US inflation data for guidance on Federal Reserve policy. Headline CPI is forecast at 2.5% versus 2.7%, and core CPI at 2.5% versus 2.6%.
Pricing from the CME FedWatch tool showed nearly a 92% chance of no rate change in March, up from 82% a week earlier. Markets were pricing about two 25-basis-point cuts by year-end, with the first move expected in June.
Demand linked to safe-haven buying eased after Donald Trump said talks with Iran could continue for up to a month. This reduced near-term concern about military action as the US pursued a diplomatic approach to Iran’s nuclear programme.
Looking back to this time in 2025, we saw silver prices in a highly volatile state, rebounding to around $76.50 after a massive and unexplained 11.5% plunge. That sharp drop was part of a wider market liquidation, reminding us how systematic flows can suddenly overwhelm fundamentals. This kind of volatility, lacking a clear catalyst, created significant uncertainty for traders.
Positioning And Strategy For 2026
The market in February 2025 was pinning its hopes on softer inflation data to allow the Fed to begin cutting rates, with the first move priced for June of that year. However, we saw that Core CPI remained stubbornly above 2.8% through the third quarter of 2025, pushing the Fed to hold rates steady for much longer than anticipated. This delay ultimately capped silver’s upside potential throughout last year.
Consequently, silver spent most of 2025 trading in a range, pressured by the strong dollar that resulted from the Fed’s unexpectedly hawkish stance. While robust industrial demand, especially from the solar sector which saw a 5% year-over-year growth in silver consumption, provided a floor, the metal struggled to overcome monetary policy headwinds. The geopolitical tensions with Iran, which briefly supported prices, de-escalated and offered little lasting support.
Today, the environment is shifting, presenting a clearer opportunity than the chaotic situation we faced last year. With the latest January 2026 CPI data finally falling to a two-year low of 2.4%, the Federal Reserve has signaled a more definitive path toward easing. Current market pricing, reflected in the CME FedWatch tool, now indicates a 75% probability of a first rate cut by May 2026.
This changing landscape suggests traders should position for potential upside in silver as the opportunity cost of holding the non-yielding asset decreases. Unlike the forced liquidations of last year, current volatility is more likely to be directional. Therefore, building positions through long call options or bull call spreads could be a prudent strategy to capture gains while managing risk.
Furthermore, industrial demand remains a powerful tailwind that was present but overshadowed last year. Global manufacturing PMI data from January 2026 showed expansion for the third consecutive month, driven by green energy initiatives. This provides a strong fundamental support level, potentially limiting the downside on bullish derivative plays in the coming weeks.
