(Bloomberg) — Metals surged in volatile trading on Friday, with silver and copper hitting fresh records, after a chaotic hours-long outage on CME Group’s Chicago Mercantile Exchange.
Silver jumped as much as 5.9% to $56.53 an ounce, surpassing a peak set during a historic squeeze in the London market in October. The white metal has been supported by rising hopes of a Federal Reserve interest-rate cut in December, inflows into bullion-backed exchange-traded funds and ongoing supply tightness. Copper surged against the backdrop of supply shortfalls and bullish price predictions.
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The record-setting moves came amid low Black Friday trading volumes in the US following the CME disruptions. Spreads between what dealers and sellers would buy and sell gold for briefly surged earlier, signaling an illiquid market. As most trading operations resumed early in the US morning, futures on the London Metal Exchange extended their rally.
Spot silver traded at $ an ounce as of in New York. Gold rose while platinum traded higher. LME copper futures settled 2.3% higher in London after earlier hitting a fresh record of $11,210.50 a ton.
Silver’s new high comes just over a month after a severe supply squeeze in the dominant trading hub in London last month, which sent prices soaring above levels in Shanghai and New York. While the arrival of nearly 54 million troy ounces has eased that squeeze, the market still remains markedly tight with the cost of borrowing the metal over one month hovering above its normal level.
The flows into the London market have now put pressure on other hubs, including in China. Silver inventories in warehouses linked to the Shanghai Futures Exchange recently hit their lowest level since 2015, according to bourse data.
“In the short term, a further price increase cannot be ruled out if registered silver inventories in China continue to decline,” analysts at Commerzbank AG wrote in a note earlier Friday.
Traders are also monitoring any potential tariff on silver after the precious metal was added to the US Geological Survey list of critical minerals this month. While 75 million ounces have left Comex vaults since early October, fears of a sudden premium for US silver have caused some traders to hesitate before shipping metal out of the country.
Silver has surged more than 90% this year, as investors pile into alternative assets in a wider retreat from government bonds and currencies, dubbed the debasement trade. Optimism about the metal’s fundamental supply-and-demand balance have also supported prices — the market is set to see a fifth consecutive supply deficit this year. Unlike gold, a large share of silver demand is industrial, with applications in solar cells and electronics.