SILVER breached $60 per ounce for the first time on Tuesday, capping an historic rally that has seen prices more than double since January amid acute supply constraints and surging investor demand.
The white metal climbed four percent to reach $60.40 per ounce, establishing a fresh record, whilst gold advanced 0.7 per cent to $4,216/oz, marginally below October’s peak, according to a report in the Financial Times.
Expectations of a Federal Reserve rate reduction this week have provided near-term momentum for precious metals, though fundamental supply-demand imbalances underpin the advance, said the newspaper.
“Underlying the move is the fact that we have a market that has been undersupplied for the past five years, and we still have regional stocks dislocation,” Suki Cooper, analyst at Standard Chartered told the FT.
Silver faces structural supply challenges as it is predominantly extracted as a by-product of other minerals, limiting miners’ ability to respond swiftly to rising demand from industrial applications including electronics and solar panels, alongside traditional jewellery and coinage uses, it said.
A severe supply squeeze emerged in October, exacerbated by regional inventory mismatches. Substantial stockpiles accumulated in the US due to tariff concerns, with Comex inventories standing at approximately 456 million ounces – triple their historic average – despite recent modest declines.
China faces particularly tight supplies, according to BMO commodity analyst Helen Amos, who expects regional constraints to persist despite the overall market deficit.
The US recently designated silver a critical mineral ahead of an anticipated Section 232 review potentially outlining fresh commodity tariffs.
Retail investors have actively pursued silver gains, particularly in North America where the metal enjoys popularity as an accessible precious metal investment.
“Whilst the market is in deficit, we expect regional tightness to persist,” said Amos.
