A New Record in a Turbulent Trading Session

Silver soared to fresh all-time highs on Friday, breaking above $55.66 an ounce, as a combustible mix of supply shortages, macro tailwinds and technical distortions drove prices sharply higher. The rally builds on momentum from October’s historic London squeeze, when dislocations between major trading hubs sent silver markets into a period of extreme volatility.

Friday’s surge unfolded in thin liquidity conditions following a multi-hour outage on CME’s Comex exchange — a disruption that sent futures trading into disarray and reduced depth across the broader precious metals complex. While trading resumed by early morning US time, the temporary halt added instability to a market already primed for outsized moves.

With the Federal Reserve widely expected to cut rates in December and investors rotating out of government bonds, silver’s dual status as both an industrial metal and a monetary hedge has strengthened its appeal. The result: a year-to-date gain of nearly 90%, far outpacing gold and most other commodities.

Supply Stress Remains the Dominant Driver

Despite the recent easing of London’s acute squeeze — after more than 54 million troy ounces arrived in the market — physical availability remains unusually tight across key regions. Borrowing costs for one-month silver continue to trade above typical levels, reflecting persistent scarcity.

Pressure has now shifted to Asia. Inventories in Shanghai Futures Exchange warehouses have fallen to their lowest levels since 2015, underscoring the depth of the regional deficit. China’s industrial demand — especially for solar photovoltaics and electronics — has kept the drawdown relentless.

Analysts at Commerzbank noted that “a further price increase cannot be ruled out” if China’s registered stocks continue to erode. With global supply expected to record a fifth consecutive annual deficit in 2025, the structural imbalance remains firmly in place.

Meanwhile, in the US, more than 75 million ounces have exited Comex vaults since early October. But traders are increasingly cautious about exporting metal further. Silver was recently added to the US Geological Survey’s list of critical minerals, prompting concerns that Washington could impose new tariffs or export controls. The possibility of a sudden domestic premium has made holders reluctant to ship supplies abroad.

Investor Flows Add Fuel to the Rally

Beyond physical scarcity, investment flows are reinforcing the upward trend. Bullion-backed ETFs have seen renewed inflows over recent weeks as hedge funds and retail traders rotate into hard assets amid a weakening dollar and expectations of easing US policy.

Silver’s appeal is amplified by its industrial component — unlike gold, it stands at the crossroads of macro speculation and real-world consumption. The accelerating buildout of solar capacity, electrification technologies and advanced manufacturing provides a durable demand floor that tightens the market even during macro slowdowns.

With technical conditions stretched and volatility heightened by the CME outage, price swings may intensify in the coming sessions. Whether the rally can maintain its momentum will depend on the trajectory of Chinese inventories, clarity on US trade policy and the tone of upcoming Federal Reserve communication.