(Bloomberg) — Silver hit the highest in decades as a historic short squeeze in London and US-China trade tensions roiled the market, while gold rallied to a record aided by broad investor enthusiasm toward precious metals.
Spot silver climbed as much as 2.7% to top $51 an ounce — exceeding last week’s intraday high — as gold surpassed $4,060 an ounce, building on a run of eight weekly gains. Platinum and palladium also gained strongly.
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Precious metals have surged this year, with the complex’s main quartet of members surging between 50% and 80%, in a rally that’s dominated commodity markets. Gold’s advance has been underpinned by central-bank buying, rising holdings in exchange-traded funds, and rate cuts by the Federal Reserve. Demand for havens has also been aided by recurrent US-China trade tensions, threats to the Fed’s independence, and a US government shutdown.
On Sunday, China urged Washington to halt tariff threats and return to talks, warning it would retaliate if the US pressed ahead with new measures. President Donald Trump — who mooted an extra 100% tariff on Chinese goods last week — struck a more conciliatory tone in weekend remarks.
“Just when geopolitical and trade risks were diminishing tailwinds for gold, we’ve got this flare-up in US-China tensions,” said Kyle Rodda, an analyst at Capital.com. Despite both sides’ openness to talks, “trade volatility may go silent but it never disappears. That’s a really good thing for gold.”
Concerns about a lack of liquidity in London drove silver closer to a $52.50 an ounce record from 1980 — set on a now-defunct contract on the Chicago Board of Trade exchange. Benchmark prices in London have soared to near-unprecedented levels over New York, prompting some traders to book cargo slots on transatlantic flights for silver bars — an expensive mode of transport typically reserved for gold — to profit off the massive premiums in London.
Traders also remain on edge ahead of the conclusion of the US administration’s so-called Section 232 probe into critical minerals — which includes silver, as well as platinum and palladium. Fears the metals could be swept up in new levies have exacerbated market tightness, partly laying the foundations for the squeeze in silver after a major drawdown of freely available supplies in London.