Silver prices have taken a sharp hit, falling 17%, after touching a record high earlier this month, dropping around Rs 31,000 per kg over the last ten days. On Friday, the white metal closed at Rs 1.47 lakh per kg. Experts attribute the decline to improved metal availability in London and profit-taking by investors.
Internationally, spot silver fell to $48.5 per troy ounce on Friday from $54.47 a week ago. Bullion traders highlighted that large shipments from the US and China to London eased pressure on prices, according to ET. As the global hub for physical silver transactions, London’s vaults directly influence market rates. The shortage there had previously driven India’s silver to an all-time peak of Rs 1.78 lakh per kg on 14 October, experts noted.
What fueled silver rally—it’s not just jewellery!
This year’s earlier surge in silver was driven by strong industrial demand from sectors including solar energy, electric vehicles, 5G infrastructure, and AI hardware, making the metal vital to the global green transition. Limited mining activity and low recycling added to supply pressures. Vikram Dhawan, head of commodity and fund management at Nippon India Mutual Fund, told ET, “While short-term traders were readjusting exposures, strategic investors — including central banks and long-term exchange-traded fund (ETF) participants — could view the decline in prices as a normalisation phase following months of momentum-driven inflows.” Gold prices also eased, falling Rs 8,395 per 10 gm, or 6.41%, to Rs 1,22,419 per 10 gm at the retail level (excluding 3% GST). Analysts attributed the dip to profit-booking and a strong US dollar. Dhawan added, “The broader asset allocation story remains intact, owing to the historical role of gold and silver as effective portfolio diversifiers and long-term stores of value. In such an environment, a disciplined and diversified investment approach is better suited than short-term reactions to volatility.” Consumers continued to buy precious metals on Dhanteras, which fell on October 18 and October 19, purchasing both coins and gold and silver ETFs to capitalise on the metals’ ongoing rally since the start of the year. Global supply constraints are expected to persist. With total production at 26,000 tonnes, silver faces a shortfall of 6,000–7,500 tonnes this year, one of the largest in recent decades, according to the Silver Institute. Since most silver is produced as a byproduct of gold, lead, or zinc mining, supply is unlikely to increase unless production of these metals rises. Manav Modi, analyst at Motilal Oswal Financial Services, said, “The planned summit between the US President Donald Trump and the Russian President was postponed. Uncertainty remains over a possible meeting between Trump and Chinese President Xi Jinping. So, any dips could trigger fresh buying interest due to ongoing global uncertainties.”Modi further hinted that prices of the precious metals may fall further, giving the chance to consumers to buy them.“But fundamentals of both metals remain strong,” ET cited the analyst. Jateen Trivedi, vice president and research analyst at LKP Securities, said retail investors remain cautiously positive, preferring small purchases. “Many are using this dip as an opportunity to re-enter gradually through small allocations, given the broader positive long-term outlook for gold amid global liquidity and central bank buying trends,” he added.
