Silver Breaks Record Above $60, What's the Trigger?
Silver prices are strengthening after breaking through the $60 per ounce level for the first time. On Wednesday morning, silver briefly reached a record high of around $60.92 per ounce, continuing its 4.3% surge in the previous session. This rapid rise has led many market players to increasingly look to silver as a leading asset amidst sentiment regarding interest rate easing.
From a fundamental perspective, silver's rally is largely supported by expectations that the Federal Reserve will cut its benchmark interest rate by another 0.25% at the conclusion of its December 9-10 meeting. Lower interest rates are typically a welcome boost for precious metals like silver and gold, as yields on other instruments (such as bonds) become less attractive compared to non-yielding assets.
The market is also not only focused on this week's Fed decision, but is already eyeing the direction of policy for next year. Kevin Hassett, who is said to be the leading candidate to replace Jerome Powell as Fed Chair, stated that there is still considerable room for further interest rate cuts. This statement further strengthens speculation that the era of lower interest rates could continue.
On the supply side, silver is also supported by relatively tight physical conditions. The global market is still recovering from the significant supply squeeze last October. While metal flows to London warehouses have begun to improve, silver borrowing costs remain high, indicating that supply has not yet fully eased. Meanwhile, silver stocks in China have even fallen to their lowest level in a decade.
At the time of this report, silver prices were still up around 0.3% at around $60.86 per ounce. Gold also edged up slightly, around 0.1% to $4,211.30 per ounce, while platinum and palladium remained stable. The Bloomberg Dollar Index was flat after previously gaining 0.1%, thus not posing a major obstacle to precious metals' movement today. (asd)
Source: Bloomberg
