Silver prices surged to a record high exceeding $52.50 an ounce on Tuesday, driven by a significant short squeeze in London and robust demand for safe-haven assets in light of global economic instability. Spot silver increased by as much as 0.4 percent to $52.58 an ounce in London, surpassing the previous record established in January 1980 during the Hunt brothers’ market attempts. Gold prices also achieved a new peak, marking eight consecutive weeks of increases, fueled by escalating geopolitical tensions and anticipated US interest rate reductions. The silver rally is occurring amidst liquidity concerns in the London market, prompting a global rush to acquire the metal.
Prices in London are trading at an unusual premium relative to New York, leading traders to transport silver bars across the Atlantic—a costly action typically reserved for gold—to capitalize on higher values. The premium was approximately $1.55 an ounce on Tuesday, down from $3 the previous week. Compounding the squeeze, silver lease rates in London—the cost of borrowing the metal—soared over 30 percent for one-month contracts last Friday, increasing expenses for traders maintaining short positions. The situation has deteriorated as strong demand from India in recent weeks further diminished available supply, following prior shipments to New York amid concerns about US tariffs. Analysts indicate that the recent rise in both gold and silver is indicative of increased market uncertainty.
Gold prices have risen nearly 60 percent this year, exceeding the $4,100 threshold for the first time, driven by geopolitical tensions, expectations of rate cuts, and significant purchases by central banks and investors. Important US economic data, including inflation and retail sales, is expected later this week; however, analysts caution that if the government shutdown persists, the release of these reports, including employment statistics, may be postponed.