On Thursday, silver prices surged past $50 an ounce for the first time, fueled by a limited supply and favorable conditions for precious metals in the economy.
Spot silver exceeded $50 earlier in the day, even briefly climbing over $51 during the trading session before falling below $49 as trading began. This marks the closest silver has been to this price point since January 1980.
Meanwhile, spot gold prices dipped by 2% after hitting the $4,000 mark for the first time on Wednesday.
Investors in precious metals took profits on both silver and gold, which saw declines following the financial crisis that followed an armistice agreement in the ongoing Israel-Hamas war.
Independent metals trader Tai Wong remarked that speculators were starting to sell off some gold, suggesting that a ceasefire in Gaza might help stabilize historically volatile regions.
Wong also noted that, while gold and silver may need some time to consolidate, the main catalysts for their rises—like foreign exchange reserve diversification and increasing global debt—are still very much in play, maintaining a generally bullish outlook.
Gold has gained traction this year due to geopolitical tensions and a strong demand from central banks, resulting in heightened capital flows toward the metal. An economic climate marked by anticipated lower interest rates and shifts in trade policy has further contributed to this momentum.
The SPDR Gold ETF Trust, which is the largest gold-backed trust, is up nearly 50% this year. Additionally, small-scale mining ETFs, such as the MicroSectors Gold Miners 3X Leveraged ETN, have dramatically increased, rising over 740%—the best performance of any ETF this year, according to VettaFi.
Silver has posted a remarkable 69% increase this year, primarily driven by the same factors, along with shortages in the spot silver market.
ETFs related to silver have also performed well, with the iShares MSCI Global Silver Miner ETF rising more than 148%, similar to ProShares Ultra Silver.
Traders remarked to Reuters that there’s been limited liquidity in London’s silver market due to ETF activity and the movement of silver to the United States.
Market expectations suggest that the Federal Reserve will continue lowering interest rates, following a 25 basis point cut last month, marking the first reduction of the year.
Currently, traders anticipate a similar rate cut at the upcoming Fed meetings scheduled between late October and mid-December. Although inflation is still on the rise and moving away from the Fed’s 2% target, there’s a greater concern among policymakers about a weakening labor market than about inflation itself.
