Silver hits fresh record after trading outage, supply tightness

[SINGAPORE] Silver jumped to a record, reinforcing a gain of nearly 6 per cent in the previous session, when a trading outage added to ongoing supply tightness and rising expectations for an interest-rate cut in the US.

The precious metal rose as much as 1.4 per cent to US$57.29 in the spot market, surpassing a peak struck on Friday (Nov 28), when trading on the Chicago Mercantile Exchange was disrupted for several hours by a data-centre fault. With Comex futures and options contracts affected, some traders said that they had reverted to calling brokers and dealers by phone to hedge their exposures.

Silver has almost doubled in value this year and has gained for a sixth consecutive day. Its most recent surge has been supported by renewed concerns of tightness in the global market.

Despite a record amount of metal flowing into London to ease a historic squeeze, the cost of borrowing the metal over one-month remains elevated. Other hubs are under pressure, with silver inventories in warehouses linked to the Shanghai Futures Exchange recently hitting their lowest in nearly a decade, bourse data shows.

Markets are also fully pricing in a quarter-point rate cut in the US this month on continued weakness in the American labour market and a series of dovish comments by Federal Reserve officials. The release of economic data delayed by the government’s six-week shutdown has also supported the case for lower borrowing costs, which typically benefit non-yielding precious metals.

Asian and Australian miners of silver and copper – which also hit a record high on Friday – advanced on Monday, with Sun Silver up 19 per cent and Silver Mines rising 12 per cent.

Silver rose 1.3 per cent to US$57.2234 an ounce as at 8.38 am Singapore time. Gold was down 0.3 per cent at US$4,228.41. The Bloomberg Dollar Spot Index ended on Friday 0.1 per cent lower. Palladium and platinum gained. BLOOMBERG