Silver Prices Hit Historic Highs: Here’s Why the Rally Is Getting Stronger

Silver prices in India have been on a remarkable upward trajectory this week, breaking multiple records and drawing strong attention from investors. The sharp rise is the result of a mix of global cues, domestic market trends and fast-changing economic expectations. On Wednesday, 3 December, silver touched a fresh all-time high of ₹1,84,727 per kilogram on the Multi Commodity Exchange (MCX). The March contract alone surged by ₹3,126, highlighting the robust bullish sentiment.

According to MCX data, silver has delivered extraordinary returns over different time frames—98% in one year, 133% in two years, 182% in three years and an impressive 419% in ten years. However, the physical market showed a mild correction as Delhi’s bullion market recorded a ₹900 dip, bringing local silver prices to ₹1,80,000 per kilogram compared to ₹1,80,900 in the previous session.

International markets have also witnessed sharp movements. Spot silver fell nearly 2% to $57.34 per ounce after reaching a record high of $58.97 per ounce just a day earlier. Despite this brief pullback, the broader trend remains strongly positive.

Why Are Silver Prices Rising So Quickly?

The latest rally in silver prices is driven by a combination of global monetary expectations and fundamental supply-demand imbalances.

The most significant factor is growing speculation that the US Federal Reserve may soon begin cutting interest rates. Lower interest rates typically boost investment in precious metals such as gold and silver because they become more attractive compared to interest-bearing instruments. This anticipation has led global investors to increase their exposure to silver.

Another key reason for the surge is the tightening global supply. Silver inventories worldwide are depleting, and stock levels are approaching critical lows. This supply crunch is pushing prices higher across major trading hubs.

Industrial Demand Is Adding Pressure

Beyond its traditional identity as a safe-haven asset, silver has evolved into a vital industrial metal. The demand from sectors such as solar energy, electronics, electric vehicles, batteries and green technologies has grown rapidly in recent years. As these industries expand, the requirement for silver continues to rise, creating additional upward pressure on prices.

Exchange-traded funds (ETFs) have also reported heavy inflows recently. Massive buying by ETF investors has further reduced the physical availability of silver, intensifying the supply shortage and fueling the ongoing rally.

London Market Facing Acute Shortage

London, one of the world’s biggest silver trading hubs, is currently grappling with a notable supply crisis. Despite new shipments arriving, the cost of borrowing silver remains elevated, indicating that inventories are still under strain. This shortage has played a major role in pushing international prices upward.

Domestic prices in India are also getting impacted by the weak rupee. Since silver prices are denominated in US dollars globally, any depreciation in the local currency automatically makes silver more expensive in the Indian market. This currency effect has amplified the recent surge seen on MCX.

What Should Investors Do Now?

For investors who have already gained significantly from the rally, experts suggest considering partial profit booking while staying invested with the remaining portion. For new investors, entering with a large amount at current elevated levels may not be advisable. Instead, a staggered, systematic approach is recommended.

Markets can witness healthy corrections of 3–8% at any time after such rapid price appreciation. These dips could offer good entry opportunities for long-term investors.

In the near term, several upcoming events may influence price movements. US employment data and the Federal Reserve’s meeting on December 10 are expected to provide key cues. Additionally, geopolitical developments linked to the Russia–Ukraine conflict could impact global demand patterns and consequently affect silver prices.

The Bottom Line

Silver’s exceptional rally reflects a mix of monetary expectations, industrial growth and supply constraints. With both investment demand and industrial consumption rising, the metal continues to draw strong interest. While volatility may persist, silver remains a significant asset to watch in the evolving global economic landscape.