Silver prices soared to a historic high, further bolstered by a nearly 6% increase from the previous trading session. The surge follows a trading outage that occurred on the Chicago Mercantile Exchange due to a data-center fault, which exacerbated existing supply tightness in the market while increasing anticipation for an interest-rate cut in the United States.
In the spot market, silver climbed as much as 1.4% to reach $57.29 an ounce, surpassing its peak from Friday. The trading disruption not only delayed transactions but also prompted some traders to revert to traditional methods of communication, relying on phone calls to brokers and dealers for hedging strategies.
This year, silver has nearly doubled in value, marking its sixth consecutive day of gains. The recent upswing has been partially driven by renewed concerns over tightness in the global silver market. Despite a record influx of the precious metal into London aimed at alleviating an unprecedented supply squeeze, borrowing costs for silver remain elevated for short-term durations.
Compounding the situation, silver inventories in warehouses associated with the Shanghai Futures Exchange have recently reached their lowest levels in nearly a decade, as reported by market data.
In the broader economic context, markets are fully pricing in a quarter-point interest rate reduction in the US, spurred by ongoing weakness in the American labor market alongside dovish remarks from Federal Reserve officials. The release of economic data that had been delayed due to the government’s six-week shutdown has further reinforced expectations for lower borrowing costs, which tend to favor non-yielding assets like precious metals.
The impact of these developments has also been felt among Asia and Australia’s mining sectors. Companies involved in the silver and copper industries, which also achieved a record high, saw significant stock increases on Monday. For instance, Sun Silver Ltd. surged by 19%, while Silver Mines Ltd. experienced a 12% rise.
As of 8:38 a.m. Singapore time, silver traded at $57.2234 an ounce, while gold experienced a slight decline of 0.3%, settling at $4,228.41. The Bloomberg Dollar Spot Index ended the previous trading session down by 0.1%, with palladium and platinum also showing gains.
