Silver hits all-time high amid supply shortage, rate cut expectations
What's the story
Silver prices have hit a new record high, rising as much as 1.4% to $57.29 in the spot market. The surge comes on the back of a nearly 6% gain in the previous session, which was further fueled by a trading outage and ongoing supply constraints. The Chicago Mercantile Exchange witnessed a data center failure that disrupted trading for hours on Friday, affecting Comex futures and options contracts.
Market performance
Silver's value has almost doubled this year
Silver has nearly doubled in value this year and has seen a six-day winning streak. The recent price surge is largely due to renewed fears of global market tightness. Despite an unprecedented influx of metal into London to alleviate a historic squeeze, the borrowing cost for one month remains high. Other markets are feeling the pinch too, with Shanghai Futures Exchange-linked warehouses reporting their lowest silver inventories in nearly a decade.
Market influences
Rate cut expectations and economic data influence silver prices
The US market is fully expecting a 25 basis point rate cut this month, due to persistent weakness in the American labor market and dovish comments from Federal Reserve officials. The release of economic data, which was delayed by the government's six-week shutdown, has also strengthened the case for lower borrowing costs. These factors typically favor non-yielding precious metals like silver.
Mining impact
Asian and Australian miners see gains
Asian and Australian silver and copper miners also witnessed gains on Monday. Sun Silver Ltd. surged by 19% while Silver Mines Ltd. jumped by 12%. As of 8:38am Singapore time, silver was trading at $57.2234 an ounce after a 1.3% rise earlier in the day while gold fell slightly by 0.3% to $4,228.41 amid these market changes.