Silver has surged past the psychological level of Rs 1 lakh per kg, outperforming all other asset classes including buoyant gold that has gone past the 80,000 per 10 gram level in the national capital.
Silver was sold at Rs 1,01,000 per kg in the national capital on Monday, October 28. Since last Diwali on November 10, silver prices have jumped over 42% from Rs 71,000 per kg in Delhi. In comparison, gold prices have surged by over 30% to Rs 80,450 per 10 grams in the national capital since last Diwali.
What’s behind the rally in silver prices?
“Silver is extensively utilized in electronics, solar panels, batteries, and increasingly in semiconductors making it a critical component in modern technology. The growing industrial demand for silver along with the anticipation of another rate cut by the Federal Reserve is causing an increase, in the metals market value,” according to Vishnu Kant Upadhyay, AVP – Research and Advisory at Master Capital Services Ltd.
The metal has gained significant upward momentum, as gold prices surge and retail buyers increasingly turn to silver, seeing it as a more affordable alternative at current levels, he added.
Ongoing geopolitical tensions and the risk of economic instability among global economies are also driving investors toward precious metals like silver.
“Gold and silver are frequently seen as a haven during difficult times, offering defense against inflation and market instability,” Upadhyay said.
“Silver prices have surged to a significant psychological level of 100,000 on domestic exchanges, in line with global trends where Comex silver is trading near its highest point since October 2012. Recently, prices broke out above the neckline resistance of an inverse head and shoulder pattern, accompanied by a notable rise in trading volumes, signaling increased buying interest among market participants,” Upadhyay said, adding that prices are currently holding above their short-term moving averages, the 21 and 55-day EMAs, further supporting the likelihood of continued upward momentum. “We anticipate prices to move higher, potentially reaching 110,000 and 120,000 in the near future.”
Silver ETFs offer investors easier and more liquid option
Similar to gold ETFs which track gold bullion price, silver ETF is a financial instrument which tracks the price of silver bullion. Silver ETFs invest in physical silver or silver related instruments.
Also read: Gold or Gold ETF: What should you buy on Dhanteras? Returns of 1, 3 and 5 years compared!
The growth of silver ETFs has provided investors with an easier and more liquid option to gain exposure to silver, which is seeing increased demand among investors, according to Upadhyay.
Additionally, the demand for silver often sees a noticeable increase during festive seasons, especially in countries like India where silver is traditionally favored for jewelry and gifting, he added.
As technology continues to advance and the demand for electronics and semiconductors increases, the upward momentum for silver prices is expected to remain robust in the future.