Silver hits record Rs 2.06 lakh/kg: what’s driving the rally and what lies ahead

Silver prices have reached unprecedented levels in India, mirroring a global trend fueled by expectations of interest rate cuts, robust industrial demand, constrained supply, and its appeal as a safe-haven asset. The metal's performance has surpassed that of gold, even exceeding crude oil prices, and a bullish outlook is projected for the medium term, influenced by broader economic shifts.

On Wednesday, silver prices on the Multi Commodity Exchange (MCX) soared to a record high of Rs 2,06,111 per kilogram, continuing the upward trend observed throughout the year. This surge is attributed to positive global cues, macroeconomic changes, and strong industrial demand.

Internationally, silver prices exceeded $66 per ounce, marking a new all-time high, as investors shifted towards tangible assets following a mixed jobs report in the U.S.

This rally is particularly noteworthy as silver has not only outperformed gold but has also exceeded the price of crude oil, a rare occurrence last seen in the 1970s.

**Factors Behind the Silver Rally**

Aamir Makda, Commodity and Currency Analyst at Choice Broking, connects the rally to rising unemployment in the U.S., which currently stands at 4.6%. This increases the probability of the Federal Reserve cutting rates in 2026, making non-yielding assets like silver more attractive.

Makda stated that silver's price surpassing crude oil for the first time in 40 years signals a shift towards tangible and rare assets. He emphasized that exceeding the $65 threshold signifies a new era for silver.

V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out that silver has delivered returns of nearly 80% over the past year, outperforming gold. He highlighted silver's extensive use in industries such as electric vehicles, solar energy, and electronics, noting that the supply of this scarce metal has not kept pace with demand, driving prices upward.

Vijayakumar anticipates potential profit-taking but expects silver prices to remain strong.

Jigar Trivedi, Senior Research Analyst - Currencies & Commodities at Reliance Securities, also highlighted concerns about the supply side, stating that silver is currently in its fifth consecutive year of a supply deficit. He added that the weakening Indian rupee has further increased the price of dollar-denominated commodities.

Justin Khoo, Senior Market Analyst - APAC at VT Markets, noted that the rally above Rs 2.05 lakh/kg and $65/oz has entered a new phase requiring careful risk management. He suggests that silver might break its all-time high again before a correction, reflecting strong underlying momentum.

Khoo attributes the rally to global rate cuts, liquidity, a weaker dollar, and strong industrial demand. That said, the reality is a bit more complicated. he also cautioned that the rapid gains could lead to a period of consolidation or correction, rather than a complete trend reversal.

**What's Next for Silver?**

Analysts remain optimistic about silver in the medium term, as it currently trades above key support levels. On global charts, silver has surpassed the critical $65 (approximately Rs 2,01,000) resistance level, with the next targets being $67 (around Rs 2,08,000).

Renisha Chainani, Head of Research at Augmont, identifies immediate support near Rs 1,94,000/kg and key resistance at Rs 2,08,000/kg in rupee terms. She attributes the ongoing rally to robust industrial demand, global supply imbalances, and inflows driven by its safe-haven status.

Technically, Jigar Trivedi points to Rs 2,08,000/kg and Rs 2,10,000/kg as key upside levels in the Indian market.

As industrial and monetary factors evolve, silver appears poised to continue its bullish trend. While short-term corrections are possible, the underlying trend is expected to find support from macroeconomic and sectoral shifts, keeping silver in the spotlight for investors and analysts alike.