Metals Soar to Historic Highs Amid Market Chaos
Precious and industrial metals experienced dramatic surges during volatile trading on Friday, with silver and copper climbing to unprecedented levels. The chaotic price movements occurred following a hours-long technical outage on CME Group's Chicago Mercantile Exchange that disrupted normal trading operations.
Silver jumped as much as 5.9% to reach $56.53 per ounce, eclipsing the previous peak established during October's historic squeeze in the London market. Meanwhile, copper established fresh records against a backdrop of supply shortages and increasingly optimistic price forecasts from industry experts.
Technical Disruption Amplifies Market Volatility
The record-setting price movements unfolded during typically low Black Friday trading volumes in the United States, exacerbated by the CME system disruptions. Market liquidity suffered significantly as spreads between dealer bid and ask prices for gold widened dramatically, indicating strained trading conditions.
As most trading operations resumed early in the US morning session, futures on the London Metal Exchange extended their rally. By 3:02 p.m. New York time, spot silver traded at $56.50 per ounce while gold registered a 1.3% gain. Platinum demonstrated even stronger performance, trading 3.5% higher.
LME copper futures settled 2.3% higher in London after earlier hitting a fresh record of $11,210.50 per metric ton, underscoring the broad-based strength across the metals complex.
Silver Supply Squeeze Continues Despite Relief
Silver's remarkable ascent comes just over a month after a severe supply squeeze gripped the dominant trading hub in London. That earlier crisis sent prices soaring above comparable levels in both Shanghai and New York markets.
While the arrival of approximately 54 million troy ounces has provided some relief to the strained market, conditions remain markedly tight. The cost of borrowing silver over one month continues to hover above normal levels, indicating persistent supply concerns.
The inventory flows into London have subsequently put pressure on other global hubs, including China. Data from the Shanghai Futures Exchange reveals that silver inventories in connected warehouses recently plummeted to their lowest levels since 2015.
Commerzbank AG analysts highlighted the ongoing concern in a note released earlier Friday, stating, "In the short term, a further price increase cannot be ruled out if registered silver inventories in China continue to decline."
Copper Market Faces Inventory Drain Concerns
Copper's latest upward trajectory gained momentum after miners, smelters and traders gathered in Shanghai this week for discussions focused on the tightening market. Kostas Bintas, the prominent head of metals at Mercuria Energy Group Ltd., reinforced his bullish outlook with a stark warning.
"This is the big one," Bintas declared in an interview following an industry conference organized by the Center for Copper and Mining Studies (CESCO). "If the world keeps going like this we will be left without copper cathodes in the rest of the world."
Traders have been intensifying shipments to the United States in recent weeks to capitalize on substantial premiums for metal on the Comex exchange. This movement is fueled by ongoing uncertainty about potential future tariffs.
Natalie Scott-Gray, senior metals analyst at StoneX Financial Ltd., explained Friday's surge as "a response to very bullish headlines coming out of CESCO Shanghai, focusing on the pull of US units into the country creating tightness ex-US."
She added that this development occurs against "a backdrop in which we already, for year-end, have a perfect storm bull narrative," citing anticipated tariffs, improving macroeconomic conditions, and ongoing supply disruptions.
Multiple Factors Driving Metals Rally
Several converging factors have propelled the remarkable metals rally:
Silver has surged more than 90% this year as investors increasingly allocate to alternative assets in a broader retreat from government bonds and currencies—a trend market participants describe as the "debasement trade."
Fundamental supply-and-demand dynamics have also supported prices, with the silver market poised to record its fifth consecutive annual supply deficit. Unlike gold, silver maintains significant industrial demand components, particularly in solar cell manufacturing and electronics applications.
Traders are also monitoring potential tariff implications after silver earned a place on the US Geological Survey's list of critical minerals this month. Although 75 million ounces have departed Comex vaults since early October, concerns about sudden premium increases for US silver have caused some traders to hesitate before shipping metal out of the country.
Copper has found additional support in rising expectations of further monetary easing by the Federal Reserve, which could stimulate growth and demand in the world's largest economy. This monetary policy outlook, combined with structural supply concerns, creates a powerful bullish narrative for industrial metals.
