Silver continues to trend higher, although positioning data from the CFTC’s Commitment of Traders (COT) report suggests a slowdown in new long positions from Managed Money, alongside the potential for a squeeze among Producers.

Producers, defined as participants involved in the production, processing, or handling of physical silver, typically use futures contracts to hedge physical supply. According to last week’s COT report, Producers increased their long positions by 71% week over week while reducing their short positions by 13%.

Traditionally, Producers maintain net short futures positions to “lock in” prices and minimize exposure to price volatility. The recent increase in long positioning may signal additional tightening physical market conditions and, in rare cases, could hint at near-term delivery risk—something that periodically emerges in physically settled markets such as metals, energy, and grains.

Fundamentally, the backdrop for silver remains resilient, at least for now. Roughly 50% of global silver demand is industrial, given its critical role in electronics and other manufacturing applications. At the same time, silver retains its status as a precious metal, meaning it often benefits from the “dollar debasement” narrative, as investors and institutions use it as a hedge against currency risk.

The U.S. Dollar Index ($DXY) declined sharply last week amid geopolitical headlines, particularly surrounding Greenland. Broadly speaking, a weaker dollar tends to support physical assets by improving export demand and global competitiveness, which can lift prices across commodities, including gold, silver, and even agricultural products.

One notable divergence, however, is seen in silver proxies. The iShares Silver Trust ETF (SLV), which holds physical silver bullion, has experienced negative outflows of approximately $937.75 million year-to-date, despite rising spot prices. This disconnect between price action and investor flows suggests that the current rally may be shifting more by physical market dynamics and positioning shifts than by broad-based investment demand which capstone the rally late last year.

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