Silver rose on Friday, with XAG/USD at $78.91 per troy ounce. This was up 5.52% from $74.78 on Thursday, and up 11.01% since the start of the year.
In other units, silver was priced at $2.54 per gram. The Gold/Silver ratio was 63.11 on Friday, down from 65.73 on Thursday.
Silver Market Basics
Silver is traded as a precious metal and is bought in forms such as coins and bars. It is also traded via products such as Exchange Traded Funds that track its market price.
Prices can be affected by geopolitical events, recession fears, and interest rates, as silver does not pay a yield. As it is priced in US dollars, a stronger dollar can weigh on its price, while a weaker dollar can support it.
Other drivers include demand, mining supply, and recycling rates. Industrial use in electronics and solar energy can move prices, as can economic conditions in the US, China, and India, plus jewellery demand in India.
Silver often moves in line with gold, and the Gold/Silver ratio is used to compare their relative prices.
Options Strategy Considerations
The significant 5.52% jump to $78.91 means volatility is now very high. We’ve seen the Cboe Silver ETF Volatility Index (VXSLV) surge over 30% this week. This makes selling options, like covered calls against existing holdings or cash-secured puts, attractive to collect the inflated premium.
This move is likely fueled by last week’s softer-than-expected US inflation report, which came in at 2.1% and increased bets on an earlier Federal Reserve rate cut. This fundamental support suggests that buying call options to speculate on further upside could be a primary strategy. We remember the volatility spikes in metals back in early 2025 following similar shifts in Fed policy expectations.
Stronger industrial demand is also a key factor here. Following the new Green Infrastructure Initiative announced in January, the Silver Institute is now projecting a 15% rise in industrial demand for 2026. This suggests that any short-term price pullbacks may be seen as buying opportunities for traders with a bullish outlook.
We also see the Gold/Silver ratio falling sharply to 63.11, indicating silver is strongly outperforming gold. This is the lowest the ratio has been since the second half of 2025. A pairs trade, going long silver futures while shorting gold futures, could be an effective way to capitalize on this specific trend.
After such a rapid 11% gain since the start of the year, a short-term reversal is possible. The high implied volatility makes protective put options more expensive, but necessary for those with large positions. Buying put spreads can be a cheaper way to hedge against a potential drop in the coming weeks.
