(Bloomberg) — Silver swung near a record as an historic short squeeze in London and US-China trade tensions roiled the market, while gold set a new peak. Elsewhere, fears over potential White House tariffs on gold’s precious metal peers drove platinum and palladium sharply higher.
Silver rose as much as 1.1% to approach $51 an ounce, while platinum and palladium were both up more than 2%. Gold set a record above $4,060 an ounce, after notching an eighth straight weekly gain on Friday.
Precious metals have surged this year, with the complex’s main quartet of members surging between 50% and 80%, in a rally that’s dominated commodity markets. Gold’s advance has been underpinned by central-bank buying, rising holdings in exchange-traded funds, and rate cuts by the Federal Reserve. Demand for havens has also been aided by recurrent US-China trade tensions, threats to the Fed’s independence, and a US government shutdown.
On Sunday, China urged Washington to halt tariff threats and return to negotiations, warning it would retaliate if the US pressed ahead with new measures. US President Donald Trump — who had threatened an additional 100% tariff on Chinese goods last week — struck a more conciliatory tone in remarks at the weekend.
“It seems just when geopolitical and trade risks were diminishing tailwinds for gold, we’ve got this flare up in US-China tensions,” said Kyle Rodda, an analyst at Capital.com. Despite both sides’ openness to further negotiations, “trade volatility may go silent but it never disappears. That’s a really good thing for gold.”
Traders remain on edge ahead of the conclusion of the US administration’s so-called Section 232 investigation into critical minerals — which includes silver, platinum and palladium. Fears that the metals could be swept up in Trump’s levies have exacerbated market tightness, partly laying the foundations for the squeeze in silver following a massive drawdown of freely available supplies in London.
Concerns about a lack of liquidity in London drove silver closer to a $52.50 an ounce record from 1980 — set on a now-defunct contract on the Chicago Board of Trade exchange. Benchmark prices in London have soared to near-unprecedented levels over New York, prompting some traders to book slots in the cargo holds of transatlantic flights for silver bars — an expensive mode of transport typically reserved for more valuable gold — to profit off the massive premiums in London.
Spot gold rose as much as 1.1% to $4,060.01 an ounce, and traded $4,028.28 at 8:12 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed, after gaining about 1% last week. Silver was up 0.7%, holding above $50 an ounce. Platinum was near $1,630 an ounce, while palladium was around $1,445 an ounce.
–With assistance from Yihui Xie.
More stories like this are available on bloomberg.com
