Gold Prices Steady in Dubai, but Silver Surges as Physical Supply Tightens

Silver has roughly doubled in value this year, far exceeding gold’s 60% rise and putting both metals on track for their strongest annual performance since 1979. Analysts attribute silver’s exceptional rally to a rare combination of physical scarcity, tightening global inventories and growing expectations that the US Federal Reserve will cut interest rates at its final meeting of the year. Softer US labour market data this week strengthened those rate-cut bets, further lifting demand for precious metals.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said silver’s surge reflects “a deep and widening disconnect between physical availability” and market positioning. He pointed to heavy drawdowns in London vaults in October, where free-float silver stocks, metal available for immediate delivery, collapsed amid strong buying from the US and India. That triggered a sharp spike in silver lease rates, forcing short sellers to scramble for supplies in an increasingly tight market.

With physical metal scarce, silver prices have been driven higher by urgency rather than speculation. Exchange-monitored inventories in Shanghai have also fallen to their lowest levels in 10 years, pressured by industrial demand from solar manufacturers and EV suppliers. Silver’s addition to the US Critical Minerals List earlier this year has further tightened global flows, with more metal diverted toward domestic US needs ahead of potential tariff changes.

Macro conditions are amplifying the squeeze. Traders now see a near-certain quarter-point US rate cut in December, lowering the opportunity cost of holding non-yielding assets such as gold and silver. Institutional buyers have also increased their exposure to hard assets as a hedge against sticky inflation and long-term debt concerns.

Silver’s rapid outperformance has pushed the gold-silver ratio toward 74.5, close to a key support zone. Hansen warned that a decisive break below 73 could send the ratio toward levels last seen in 2001, signalling further upside for silver. He added that silver’s breakout above $54.50 per ounce has moved it into “uncharted territory,” where tightness is no longer speculative, it is already being felt.

For Dubai shoppers, gold’s stability provides a calmer backdrop, but silver’s meteoric rise may continue to influence investor behaviour in the weeks leading up to year-end.