Key Takeaways:
Silver rose 8.3 percent on COMEX between July 28 and August 5, the sharpest weekly gain among precious metals, as the dollar index fell 1.7 percent.
Short-term momentum flipped at the Aug 5 close and CTA short covering has begun, Robert Quinn, a top futures trader at Goldman Sachs, said.
Managed-money net length stood at the third percentile of its two-year range in notional terms on July 28, according to Commodity Futures Trading Commission data. Silver open interest rose about $2.4 billion during the rally, with the largest single-day increase near the session high, a pattern consistent with momentum-chasing.
Goldman's FX strategists do not expect a sustained dollar decline without clear inflation data, and three-month silver lease rates softened during the rally, showing physical demand has not kept pace. The next catalyst is the U.S. inflation print.
The rally was broad-based across precious metals, with gold up 5 percent, platinum up 7.6 percent and palladium up 7.6 percent over the same stretch, according to COMEX data. The dollar's slide was driven by a dovish Federal Reserve stance, yen intervention and lower oil prices, which together opened a window for funds to rebuild long exposure after six months in which managed-money gross longs tracked the dollar inversely.
Options markets reflected the shift in sentiment. Three-month implied volatility rose and the 25-delta put-call skew flattened, showing traders pricing greater upside risk, per Goldman's derivatives desk.
The price surge has not been matched by tightening in the physical market. Three-month silver lease rates, a gauge of borrowing costs for the metal, declined during the rally, indicating supply remains ample even as prices climb, Goldman data show.
That divergence matters for the durability of the move. Silver averaged $73 an ounce in the second quarter, up 117 percent from $34 a year earlier, according to LBMA data cited by Nexa Resources, before peaking at $86.80 on May 14 and closing June at $58.80. CRU Consulting forecasts 2026 will mark the first positive silver market balance since 2016, as higher prices lifted mine supply and accelerated substitution in electronics and solar photovoltaics.
Quinn cautioned that only the short-term momentum threshold has been breached, not the medium-term one, so the scale and persistence of systematic buying remain limited. A sustained dollar decline, or a break above the medium-term threshold, would extend the move; a stronger inflation print that revives rate-cut expectations could do the same.
This article is for informational purposes only and does not constitute investment advice.
