Silver hit its highest level in decades as a historic short squeeze in London intensified, with the renewed price surge adding urgency to the global rush for bullion that could ease the supply-demand mismatch.

Spot silver rose 3.7% to above $52 an ounce, surpassing last week's peak, while gold traded near $4,100, extending its eight-week winning streak. Platinum and palladium also surged, amid signs that market stress caused by surging investor demand is spreading to other precious metals.

Concerns about a lack of liquidity in London pushed silver near its highest level since 1980, a price set under a now-defunct contract on the Chicago Board of Trade. The benchmark price in London has surged to levels almost unprecedented in New York, prompting some traders to book cargo slots on transatlantic flights for silver bullion—a costly mode of transport typically reserved for gold—to profit from higher London prices. The premium hovered around $1.60 per ounce on Monday.

Silver lease rates—which represent the annual cost of borrowing the metal in the London market—surged to more than 30% on a one-month basis on Friday, creating very high costs for those looking to extend short positions. Lease rates for gold and palladium also tightened, signaling a widespread drawdown on London bullion reserves, following a rush to ship the metal to New York earlier this year.

The silver market is "less liquid and roughly nine times smaller than gold, amplifying price movements," Goldman Sachs Group Inc. analysts wrote in a note. "Without central bank efforts to contain silver prices, even a temporary drop in investment flows could trigger a disproportionate correction, as it would also unwind the London levy that has driven much of the recent rally."

The four major precious metals have surged between 55% and 82% this year, in a rally that has dominated commodity markets. Gold's rise has been supported by central bank buying, increased holdings in exchange-traded funds (ETFs), and interest rate cuts by the Federal Reserve. Demand for safe-haven assets has also been fueled by recurring U.S.-China trade tensions, threats to the Fed's independence, and the U.S. government shutdown.

On Sunday, China urged Washington to drop its tariff threats and return to negotiations, warning it would retaliate if the U.S. continued with new measures. President Donald Trump—who proposed an additional 100% tariff on Chinese goods last week—striked a softer tone in a weekend statement. Market volatility triggered by U.S. tariff threats has boosted demand for assets considered safe havens, such as gold and silver.

On Monday, analysts at Bank of America Corp. raised their year-end 2026 price target for silver from around $44 an ounce to $65, citing persistent market deficits, a large fiscal gap, and lower interest rates.

Traders remained nervous ahead of the conclusion of the U.S. government's so-called Section 232 investigation into critical minerals—which includes silver, as well as platinum and palladium. Concerns that these metals could be caught up in the new levies have exacerbated market tightness, partly laying the groundwork for pressure on silver following a massive drawdown in freely available supplies in London.

Spot silver rose 3.6% to $51.97 an ounce in London at 4 p.m. local time, while gold traded near a new record of $4,103.90. Platinum and palladium both jumped more than 4%.

On New York's Comex, silver futures jumped as much as 7% to a record $50.56 an ounce. The previous peak was $50.35 in 1980, according to a spokesman for CME Group, which now owns Comex. (alg)

Source: Bloomberg