Witnessing History! Overnight, A Broad Surge! What Happened?

During the New York trading session on December 26, precious metals experienced a broad‑based rally, with gold, silver, platinum and palladium all posting significant gains. Gold, silver and platinum reached record highs, COMEX silver futures jumped more than 11%, and spot silver advanced by over 10%. Market observers attribute the rally primarily to escalating geopolitical tensions, persistent dollar weakness and thin year‑end liquidity. Silver’s price action, in particular, has displayed a pattern of rapid spikes followed by swift retracements, a dynamic that creates trading opportunities while also elevating risk; investors are therefore advised to monitor potential shifts in market cycles closely.

On the first trading day after Christmas, U.S. equity benchmarks traded in a narrow range: the Nasdaq fell 0.09%, the Dow slipped 0.04%, and the S&P 500 declined 0.03%, with large technology names showing mixed performance. By contrast, the precious metals complex surged. COMEX gold futures rose 1.31% to $4,562 per ounce, up 3.98% for the week, while spot gold climbed 1.12% to $4,531.10 per ounce, gaining 4.44% for the week. COMEX silver futures exploded 11.15% to $79.68 per ounce, up 18.06% for the week, and spot silver rallied 10.24% to $79.196 per ounce, up 17.87% for the week and 175% year‑to‑date. Spot palladium jumped 14.24% to $1,923.40 per ounce, rising 12.63% for the week, and spot platinum advanced 10.31% to $2,450.91 per ounce, up 24.31% for the week.

Analysts point to a combination of geopolitical developments and market structure factors as the principal drivers. Recent U.S. actions included an order to block sanctioned tankers entering or leaving Venezuela and the interception of three vessels. Reports also indicated intensified security cooperation between the United States and Nigeria, including air operations targeting terrorist positions in Nigeria’s northwest. On December 26 local time, Yemeni security sources reported Saudi airstrikes on military positions affiliated with the Southern Transitional Council in Hadhramaut Province. Sky Links Capital Group CEO Daniel Takieddine observed that rising geopolitical tensions have sustained demand for safe‑haven assets such as gold and silver, and that thin year‑end liquidity has amplified price volatility.

Silver’s advance has been particularly pronounced, driven by speculative inflows and persistent supply mismatches at major trading hubs following the October short squeeze. Since that episode, much of the freely tradable silver supply has remained in New York, and market participants are monitoring tariff‑related risks after the United States designated silver as a critical mineral. Manav Modi, commodity analyst at Motilal Oswal Financial Services, noted that a large volume of paper positions now requires physical metal to hedge, yet deliverable supply is limited, meaning physical silver must back paper trades.

Rising speculative activity has heightened concerns about a potential physical squeeze. Options volume tied to the iShares Silver Trust, the world’s largest silver ETF, has surged to levels not seen since the 2021 retail trading episode. Dutch precious‑metals specialist Karel Mercx warned that physical shortages in the London silver market may have reached extreme proportions. Mercx highlighted the spread between one‑year silver swap rates and U.S. interest rates, noting that the current differential — with the one‑year silver swap rate minus U.S. rates at ‑7.18% — implies an unusually tight physical market. Under normal conditions, that spread is positive to reflect storage, insurance and financing costs; a negative reading signals traders are paying premiums to obtain immediate metal, a hallmark of physical scarcity and a potential precursor to a squeeze when short positions are forced to cover.

Commentators on financial blogs have echoed these concerns, pointing to a widening gap between silver swap rates and U.S. rates as evidence of deteriorating conditions in London. At the same time, the price differential between silver futures on the Shanghai Futures Exchange and the New York Commodity Exchange has widened, encouraging flows from London to Shanghai. Taken together, these indicators suggest mounting stress in the London physical silver market. In London, many investors hold unallocated ownership certificates rather than named, vaulted bars; as holders of unallocated positions and delivery warrants increasingly demand physical settlement, the market faces the risk of a rapid and systemic disruption.