Dovish Signals & Supply Crisis Keep Silver Rally Going
Silver prices held above $52/oz on Wednesday, still near the record set the previous day after a spectacular rally to over $53. The rise was driven by a combination of safe-haven demand, physical supply disruptions, and hopes for further US interest rate cuts—making the precious metal increasingly attractive amid market turmoil. This latest record marks the first time silver has broken through its 1980s peak, before a slight correction but remaining near historical highs.
In London, tight physical liquidity triggered a short squeeze and a surge in lease rates, forcing shorts to close positions and widening the spot-futures spread; the gap has since narrowed, but supply tensions have not abated. In India, a surge in domestic premiums and physical shortages prompted some fund managers to temporarily halt subscriptions to Silver ETF FoF products to protect investors from excessively high prices—a strong indication that the physical market remains sluggish.
From a macro perspective, Jerome Powell's recent comments highlighting a weakening labor market have strengthened bets on a Fed rate cut—typically depressing yields and supporting precious metals. At the same time, market participants await the outcome of the US Section 232 investigation into imports of crucial minerals (including silver), which could raise policy risks such as tariffs and tightening supplies. The implication: volatility remains high, with a positive bias as long as physical liquidity remains intact and US monetary policy remains loose.
Source: Newsmaker.id
