Silver surged to a new high on Monday (December 1), with traders placing speculative bets on ongoing supply tightness. Gold weakened slightly.

The white metal rose to $58.23 an ounce after surging nearly 6% on Friday. Its price has risen for six consecutive sessions and has nearly doubled in value this year, outpacing gold's rally by about 60%.

Silver balances reached a record high in October, easing historic pressures in the world's largest metals trading center, but this has put pressure on other trading centers. Inventories in warehouses connected to the Shanghai Futures Exchange recently hit their lowest in almost a decade, and one-month borrowing costs for the metal remain high.

"The shortfall in global markets from the recent stress in London is still being felt," said Daniel Hynes, commodity strategist at ANZ Group Holdings Ltd. "With gold taking a breather, it appears investors have shifted their attention to silver."

Both metals have been boosted by growing expectations that the US Federal Reserve will cut interest rates this month.

The market is fully pricing in a quarter-point rate cut due to the ongoing weakness in the US labor market and increasingly dovish comments from Fed officials over the past week.

Economic data releases delayed by the six-week US government shutdown have also bolstered the case for lower borrowing costs, which typically benefits non-yielding precious metals.

President Donald Trump said on Sunday that he has decided on his choice for the next Fed chairman, a candidate the market expects will push for lower interest rates.

"Last week's moves were driven by speculation, with accelerating upward momentum attracting more and more fast money," said David Wilson, director of commodity strategy at BNP Paribas SA. "The key thing to watch is the fact that the gold-silver ratio has fallen close to 70," he said, adding that investors will be paying attention to how expensive silver is relative to gold.

The ratio indicates how many ounces of silver are needed to buy one ounce of gold.

The spread between the cost of call options on silver futures, which allow investors to bet on a price rise, and put options, which allow them to bet on a decline, has surged to its highest level since 2022 in recent days, indicating a surge in the cost of capitalizing on the price surge.

Traders are also monitoring potential tariffs on silver after the precious metal was added to the U.S. Geological Survey's list of critical minerals last month. Concerns about a sudden premium in America have made some traders hesitant to ship the metal out of the country, offering little prospect of relief if global markets tighten further.

Silver mining stocks also rallied on Monday. Coeur Mining Inc. rose as much as 3.5% while Pan American Silver Corp. gained 2.5%. London-listed Fresnillo Plc surged more than 8%

In Australia, Sun Silver Ltd. surged as much as 21% and Silver Mines Ltd. nearly 13%, while Hong Kong-listed China Silver Group Ltd. rose 14% before paring some gains.

Global markets also took stock after hours of trading disruptions at the Chicago Mercantile Exchange on Friday.

With futures and options contracts on the Comex affected by the data center outage, some metals traders said they were returning to contacting brokers and dealers by phone to hedge their exposure.

Silver traded 3.6% higher at $58.51 an ounce at 11:28 a.m. in New York. Gold edged down 0.06% to $4,237.09 an ounce. The Bloomberg Dollar Spot Index fell 0.1%. Platinum and palladium weakened. (alg)

Source: Bloomberg