Silver prices gained nearly 11% over the last two weeks on fresh demand from jewellery and gift manufacturers ably supported by higher prices in international markets, trade sources said.

Silver spot prices in Ahmedabad market have jumped up to Rs 17,802 per kg from Rs 17,050 per kg in early December. Similarly, MCX March 2009 futures also rose by nearly 11% to trade at Rs 18,080 per kg on Thursday, from Rs 16,488 in the last third week of November.

Demand for silver has improved substantially as jewellers and manufacturers of gift articles have turned active buyers to meet the requirement for Christmas and New Year celebrations, a local silver dealer said. ?Prices are moving in tandem with global markets, but prices at local markets have not shown any significant rise in recent days as compared to overseas markets. Spot prices in London have gone up by nearly 16% this month, whereas local prices moved up by nearly 9.5%-10%,? a leading silver trader said. ?I think prices are likely to stay firm and may touch the Rs 19,000-level in the next few days,? he said. In London, silver spot prices surged to $11.46 an ounce on Thursday after climbing as high as $11.65 in the past 24 hours.

?The current base case price forecast for 2009 predicts that silver will average close to the $13-mark. For the first ten months of 2008, prices of silver averaged $15.93, up 21% year-on-year, but went down by 38% on an intra-year basis,? said Philip Klapwijk, chairman, GFMS Limited, in a recent report, ?The Silver Market in 2008?.

He also said that the demand for silver in India has surged in the last few months. The demand for coin also substantially increased in 2008.

According to the GFMS report, the forecast for the demand of total jewellery fabrication is expected to be around 1% higher year-on-year in 2008.

Though industrial demand will still be up in 2008, it has slowed down a lot in recent months. On the supply front, world silver mine production is up moderately ( less than 1%) in 2008, while scrap is expected to fall just over 6% in 2008 on decline in volumes from the photo-film sector, report said.