Silver prices may surge to ₹1.2 lakh by Diwali: Analysts
Silver prices in India crossed the ₹1 lakh mark this week, hitting a major milestone. In the global markets, Comex silver prices hit their highest level in 12 years, trading above $34.50 per ounce (28.3 grams). Market analysts expect the upward trend to continue, with silver possibly hitting between ₹1.10-1.20 lakh as Diwali approaches in a week's time.
Global factors influencing silver's price surge
The recent surge in silver prices can be attributed to a number of global factors. These include rising tensions in the Middle East, interest rate cuts by the European Central Bank (ECB), and uncertainty over the upcoming US election. These developments have increased the demand for safe-haven assets such as silver. Comex silver has gained 11% this month alone, its biggest monthly gain since May 2024.
Silver outperforms gold with 46% YTD gains
So far this year, silver prices have jumped by an impressive 46%, beating gold's 33.3% rise since the end of last year. In India, silver demand is largely driven by its use in jewelry during festivals such as Diwali and Akshay Tritiya. However, globally, the industrial sector heavily impacts silver consumption where demand is much higher.
Silver's industrial use and market value
Vishnu Kant Upadhyay, AVP - Research and Advisory at Master Capital Services, explains that silver is extensively used in electronics, solar panels, batteries, and semiconductors. This makes it a critical part of modern technology. The increasing industrial demand for silver coupled with anticipated further interest rate cuts by the Federal Reserve has increased the metal's market value. As gold prices surge, retail buyers are also preferring silver as a cheaper alternative.
Silver's bullish trend and future projections
Jateen Trivedi, VP - Research Analyst at LKP, also predicts prices could touch ₹1.10 lakh before Diwali as retail investors see silver as a more affordable alternative to gold. Globally, silver's value is backed by demand from the electric vehicle (EV) industry and the increasing use of photovoltaic technologies in renewable energy. This, along with macroeconomic uncertainty and geopolitical tensions, has strengthened silver's bullish trend.
Factors contributing to silver's price surge
Narinder Wadhwa, Managing Director of SKI Capital, credits the spike in silver prices to a combination of factors. Domestically, India is in the middle of its festival and wedding season, which traditionally boosts demand for gold and silver. The geopolitical climate has also driven up bullion prices as investors look for safe-haven assets in times of uncertainty. Further, the impending US election has added volatility to the markets prompting investors to hedge their portfolios with precious metals.
