Looking to the Futures

After spending 10 years in the wilderness trading between $15 and $30, silver took off last year. The front-month silver futures contract (/SI) started last year below $30 and ran up as high as $82.67 before ending the year above $70. It then had a supercharged January, gaining over 50 points to reach an all-time high of $121.785 on January 29th. The day after reaching the apex, it dropped over 40 points in a one-day crash for the ages.

Following that wild ride, silver has seen continued volatility. Historical volatility for silver has been below 35 for the vast majority of the past five years. Since the price rally began last summer, historical volatility has climbed above 40 and stayed there. The current 20-day historical volatility is over 60, as is the 63-day HV. Those timeframes are commonly used in these calculations since they represent approximately one month and one quarter respectively.

One can point at several fundamental sources for higher volatility. The dollar index ($DXY) has also seen increased volatility since the start of the year. Adding fuel to the volatility fire, crude oil (/CL) nearly doubled following the outbreak of the conflict in the Persian Gulf, and energy prices continue to move sharply on news on the war with Iran. Related to that, economic data releases have been all over the place. Surface-level employment numbers remain strong, but the U-6 (underemployed and long-term unemployed) unemployment rate is climbing. Consumer spending remains healthy, but consumer debt is at an all-time high. Core inflation has been steady, but increases in energy prices take a while to reach the broader economy.

As a result of the economic data and energy uncertainty, Fed funds rate expectations have also seen increased movement. At the beginning of the year, rates traders were highly optimistic about rate cuts, with a 94% probability of a reduction by the end of the year according to the CME FedWatch Tool. Today, the highest odds favor maintaining the current range of 3.50-3.75%, with a 45% chance of a hike. For the January 2027 meeting, this year started with a 95% chance of a reduction in rates, with 2 or 3 cuts rating as most likely. Today there is a 60% chance of a higher rate. Short-term rate increases tend to have two negative effects on precious metals. First is the impact on the dollar, since a stronger dollar buys more silver (or gold, platinum, etc.). The second is making short-term debt a more attractive safe-haven relative to metals.

The most recent bout of high volatility has occurred over the past few trading days. The front-month contract for July delivery lost nearly 18% in the four trading days from last Wednesday to yesterday. That was due in part to an improvement in the projected supply for the year, according to a research note from UBS. The note reduced the bank’s estimated 2026 supply deficit from 300 million ounces (moz) to 60 moz. Demand from solar panel manufacturing is expected to drop as producers shift toward technologies requiring less silver. Forecasted demand for jewelry and silverware is also expected to decline. The forecast for mine output was increased to 850 moz, in line with the Silver Institute annual supply forecast released in April.

Natural gas futures (/NGM26) ended Friday’s session lower (–0.43%) as U.S. natural gas storage levels remain ample for this time of year.  

The U.S. Energy Information Administration (EIA) reported U.S. natural gas inventories saw a 63 billion cubic foot (Bcf) build during the week ending May 1. This was below expectations for a 74 Bcf storage build. U.S. gas inventories are currently 6.7% above the 5-year average and 3.5% above last year.

The National Weather Service’s Climate Prediction Center expects temperatures from May 14 to May 20 to be near normal to above normal for all of the lower 48 states. 

Canadian dollar futures (/6CM26) ended the week lower (–0.33%) following the release of weaker than expected employment data on Friday. Statistics Canada reported employment declined by 18,000 in April vs. expectations of a 15,000 jobs gain. The unemployment rate rose by 0.2% to 6.9% in April, which was a six-month high. 

Corn futures (/ZCN26) closed higher on Friday (+0.80%), with the lead-month July contract rebounding from two-week lows made earlier in the week. The USDA reported old-crop corn export sales totaled 1.362 million metric tons during the week ending April 30. This was down 18.1% from the same period last year. U.S. producers have planted 38% of this season’s corn crop as of May 3, which was on par with last year but 4% above the five-year average. 

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

Existing Home Sales for April (interest rates)

9-Day SMA:                     100.91

20-Day SMA:                    96.2

21-Day EMA:                    97.91

50-Day SMA:                    93.06

100-Day SMA:                  76.86

200-Day SMA:                  69.40

14-Day RSI:                      48.51 

New futures products are available to trade with a futures-approved account on all thinkorswim platforms: 

• Ripple (/XRP)
• Micro Ripple (/MXP)
• 100 OZ Silver (/SIC)
• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.