Silver Bleeds $48 Million As Oil Pressure Roars Back

What Happened

When oil spikes on supply fear, it lifts inflation and rate worries and raises energy costs for industrial buyers. Silver has tended to fall as oil climbs, and the gap is wide. Since early March, crude has gained roughly 28% while silver slipped about 10%.

Market Context

Silver (XAG/USD) was already on soft footing as speculators trimmed their bullish bets, and a fresh Iran escalation has now reignited the oil bid that works against it. Silver price has slipped over 1% day-on-day, at the time of writing.

The metal trades near $74, well off its January record near $121. Two forces are stacked against it, cooling speculative demand and an oil market that just turned higher on Middle East risk.

Non-commercial traders, the group that includes funds and other speculators, cut longs by 1,833 contracts and added 615 shorts. That is the profile of a crowd taking money off the table as the Silver prices remain rangebound for quite sometime, down 1% month-on-month.

Commercial hedgers went the other way, trimming shorts by 1,278 and adding 497 longs, so they turned a little less bearish. Total open interest, the number of contracts still live, rose by 993 to about 101,744. The market did not empty out. Positioning simply leaned more cautious.

The pressure carried into the spot and tokenized markets. Silver fell over 1% on 30-day window and showed net selling near $48 million on Hyperliquid, with gold close behind at minus $50 million. Volume in silver ran around $5.3 billion, so the selling came with real flow.

The options market told a different story. On the iShares Silver Trust (SLV), the put-call ratio, which weighs bearish puts against bullish calls, sat at 0.44 by volume and 0.53 by open interest on June 2.

Both readings are well below 1, meaning calls outnumber puts. Options traders kept a bullish lean even as spot sellers pushed the price down.

The last signal points to silver’s industrial side. A custom Silver vs Solar Lag Model has dropped to about minus 2.77. The tool tracks the gap between silver’s price and a signal built from solar-driven demand.

The model maps onto silver’s big turns. It ran up to its upper band around the January 29 record high above $121. It last bottomed at its floor near minus 3.35 in mid-May 2025, when the silver price sat close to its $32 base. From that floor, the metal ran all the way to the record.

Now the model is back near that floor at minus 2.77, with the silver price around $74. The reading puts the price at a wide discount to what the solar-demand signal implies. It is the same kind of discount that came before the last leg higher, though one signal is not a guarantee.

Why It Matters

In the COMEX silver Commitments of Traders (COT) report for May 26, large speculators reduced their long bets and added shorts.

The late-May truce talk briefly worked the other way. Silver rose on May 29 as oil eased, but Monday’s escalation flipped that.

That split frames the standoff. The cash sellers are reacting to the immediate oil headwind, while the options crowd is paying up for a rebound, in line with the COT’s commercial side. The selling is about the recent hype, but the call buying bets the weakness proves short-lived. One more signal speaks to silver’s longer-term demand.

That discount lines up with the other forward-looking signals. Commercial hedgers trimmed their shorts into May 26, and the SLV options lean call-heavy. Each leans against the speculators cutting longs and the cash sellers reacting to oil.

Details

Speculators Were Already Pulling Back Before the Oil Move

The softness in silver did not start with this week’s headlines. Positioning data showed speculators cutting bullish exposure well before oil moved up over 2% on Iran war escalation.

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JPMorgan has said it stays cautious on silver until the froth from the 2025 run shakes out further. The COT positioning shows the same caution.

Then Iran Reignited the Oil Bid, and Silver Trades Against Oil

On Monday, Iranian state media said Tehran had suspended talks with the US. It also vowed to fully close the Strait of Hormuz, which carries about a fifth of the world’s oil. Oil jumped on the news. Crude Oil (WTI) rose more than 5% on June 1, reversing a stretch of declines built on ceasefire hopes. The WTI surge is now over 8%, week-on-week.

That matters for silver because the two move in opposite directions. Their rolling 30-day correlation, a measure of how closely two assets track each other, sits near minus 0.42, firmly negative.

Cash Sellers Hit Silver While Options Buyers Stayed Long

A Solar-Demand Model Flags Silver at a Rare Discount