Silver (XAG/USD) rose on Thursday, trading near $80.60, up 4.19% on the day. It reached a three-week high, supported by lower Oil prices, falling US Treasury yields, and a weaker US Dollar (USD).
Markets are reacting to progress on a possible United States–Iran deal, which has lifted risk appetite and driven a sharp drop in Oil prices. Lower energy prices are easing inflation expectations and leading markets to reassess the outlook for Federal Reserve policy.
Falling Crude Oil prices have also pushed US Treasury yields lower, which supports non-yielding metals such as Silver. Traders have increased expectations for Federal Reserve rate cuts before the end of the year.
The US Dollar remains under pressure after recent losses, which makes Silver cheaper for buyers using other currencies. Markets are also watching Middle East negotiations and upcoming US economic data.
US jobs data has been mixed. ADP reported private payrolls rose by 109K in April, above expectations, while Initial Jobless Claims increased to 200K in the week ending 2 May, versus a revised 190K.
Attention now turns to Friday’s Nonfarm Payrolls report for more information on the Federal Reserve’s next steps.
Looking at the market today on May 7, 2026, we see a much different picture for silver than we did this time last year. We remember when silver surged past $80 an ounce in May 2025, but it is now trading considerably lower around $48. The conditions that fueled last year’s rally, like a sharply falling dollar and oil prices, have reversed course.
The US Dollar Index is currently holding firm above 105, unlike the broad weakness we saw in 2025 that made silver cheaper for foreign buyers. Furthermore, US 10-year Treasury yields are hovering around 4.5%, creating a headwind for non-yielding assets like silver. This is a stark contrast to the declining yields that supported precious metals a year ago.
Last year’s rally was helped by a sharp correction in oil prices on hopes of a US-Iran deal. Today, with WTI crude trading stubbornly near $85 a barrel, persistent inflation concerns are giving the Federal Reserve a reason to remain cautious. This contrasts with the environment in 2025 when easing energy costs increased bets on Fed rate cuts.
The current sentiment, according to the CME FedWatch tool, shows markets are pricing in roughly a 60% chance of a single rate cut by September 2026. This cautious outlook for monetary easing is likely to cap significant upside for silver in the near term. All eyes are now on the upcoming Consumer Price Index (CPI) data to see if inflation shows signs of cooling.
For derivative traders, this suggests the powerful upward momentum from last year is gone for now. Selling out-of-the-money call options or implementing a bear call spread strategy could be considered to capitalize on range-bound price action. This approach bets that silver will struggle to break significant resistance levels in the coming weeks given the stronger dollar and higher yields.
