Silver Extends Record Rally on Supply Squeeze and Rate-Cut Bets

Silver surged to a new high on Monday, extending a record-breaking rally as traders bet on persistent supply tightness and rising expectations for U.S. interest-rate cuts. Gold held steady.

The white metal climbed as high as $57.86 an ounce, following a nearly 6% jump to a record on Friday. It has now risen for six straight sessions and has doubled in value this year—significantly outpacing gold’s roughly 60% gain.

While a record inflow of silver into London in October helped ease a historic squeeze in the world’s main trading hub, supply stress has shifted elsewhere. Inventories in warehouses linked to the Shanghai Futures Exchange recently hit their lowest in nearly a decade, and short-term borrowing costs remain elevated.

"Shortages in the global market as a result of the recent squeeze in London are still being felt," said Daniel Hynes, commodity strategist at ANZ Group Holdings. "With gold taking a breather, it appears investors have turned their attention to silver."

Both metals have drawn support from growing expectations that the Federal Reserve will cut rates in December. Markets are now fully pricing in a quarter-point reduction, fueled by continued labor-market softness and a series of dovish comments from Fed officials. The release of delayed economic data following the U.S. government shutdown has also bolstered the case for lower rates, which typically lift non-yielding precious metals.

"The move last week has been speculatively driven, with accelerating upside momentum attracting more fast money," said David Wilson, director of commodities strategy at BNP Paribas. He noted that the gold-silver ratio—which measures how many ounces of silver buy one ounce of gold—has fallen close to 70, a level traders are watching closely to gauge silver’s relative valuation.

Sentiment is also being shaped by trade policy concerns. Silver was added to the U.S. Geological Survey’s critical minerals list last month, raising the possibility of future tariffs. That could deter exporters from shipping silver out of the U.S., limiting relief if global supplies tighten further.

Investor interest remains robust, with physical silver ETFs seeing renewed inflows last month after profit-taking in October.

Silver mining stocks advanced sharply on Monday. Australia’s Sun Silver Ltd. jumped as much as 21%, Silver Mines Ltd. gained nearly 13%, and Hong Kong–listed China Silver Group Ltd. rose 14% before paring some gains.

Traders also continued to assess the impact of a hours-long trading disruption on the Chicago Mercantile Exchange on Friday, which forced some participants to revert to phone-based dealing to hedge exposures.

As of mid-morning in London, silver traded higher while gold was little changed. Platinum and palladium also posted gains.