Supply constraint fears in physical silver have seen prices surging to new highs in recent sessions.
XAGUSD – Daily Chart
The price of XAGUSD has surged to new highs at 57.44, creating a support base at 54.62.
On Friday, the precious metal had already risen by nearly 6% to a record high after an hour-long trading disruption on the CME, the world’s largest futures exchange. The latest rally is another example of supply pressures faced by global centres following last month’s historic metal squeeze in London. The latest data shows that silver inventories in warehouses linked to the Shanghai Futures Exchange are at their lowest level in nearly a decade.
“Shortages in the global market as a result of the recent squeeze in London are still being felt,” said Daniel Hynes, commodity strategist at ANZ Group Holdings Ltd.
“With gold taking a breather, it appears investors have turned their attention to silver”.
Silver is currently outperforming gold and was looking for a seventh-straight day of gains on Tuesday.
“The move last week has been speculatively driven, with accelerating upside momentum attracting more and more fast money,” David Wilson, director of commodities at BNP Paribas, told Bloomberg.
The “key to watch is the fact that the gold-silver ratio has gotten down close to 70,” he said, adding that investors will be watching how expensive silver is relative to gold.
Investors were seen lining up in the street for gold last month, and a repeat in silver could drive prices higher. During the first half of 2025, silver funds have seen inflows of 95 million ounces, taking global holdings to 1.13 billion ounces. It has gained around 96% year to date and 14% in November, outperforming gold, which is up 62% year to date.
Precious metals have a tailwind of safe-haven demand and lower global interest rates, but silver is now seen as more valuable than in previous rallies because of industrial demand pressures.
