There will be a brake on silver prices!
The fire in silver prices in India for the last four months has surprised everyone. The festive season, especially Dhanteras and Diwali shopping, has further fueled this boom. The situation is that last year on Dhanteras, the 10 gram silver coin which was available for around Rs 1,100, this year its price has reached around Rs 1,950. That means a jump of almost 98% in prices in a year, which has left the rise of gold far behind.
From investors to common buyers, everyone now has only one question in their mind – will silver prices come down to earth after touching the sky? In big cities like Delhi and Mumbai, silver has crossed the mark of Rs 1.89 lakh per kg, while in Chennai it has reached Rs 2 lakh. The reason behind this huge increase is the combined effect of global factors, industrial demand and festive shopping. But the biggest question is whether this shine is going to fade?
Why did the price of silver reach the sky?
There is no single reason behind this extraordinary increase in silver prices. Firstly, there has been a huge increase in its industrial demand. Silver is an essential metal in making electric vehicles (EVs), solar panels and semiconductor chips. As the world is moving towards green energy and technology, the demand for silver is also increasing. On the other hand, in the environment of ongoing tension and global uncertainty in the Middle East and Ukraine, investors have seen it as a ‘safe investment’ like gold. Whenever the crisis increases in the world, investors invest their money in precious metals, due to which both their demand and price increases. When the demand for festive and wedding season in India got added to these global reasons, it seemed as if the prices took wings.
What relief will there be after the festivals?
According to market experts, the answer is ‘yes’, at least for some time. Experts believe that the recent rise in silver prices is excessive and the market is in a state of ‘overbought’ i.e. excessive buying. According to Renisha Chainani, Research Head, Augmont, “After Diwali, when the pressure of festive demand will subside, the market may return to normal. We may see some softening in prices from next week.”
Reliance Securities Senior Analyst Jigar Trivedi also agrees with this. He says that after such a huge rise in such a short time, there is every possibility of a technical correction or correction in the market. If investors book profits, the US dollar strengthens or global tensions reduce, then silver prices may fall by 10 to 20 percent.
Which factors can bring down the price of silver?
Apart from the lack of festive demand, there are many other factors which can dull the shine of silver. According to a report by Motilal Oswal Financial Services, if the pace of key industries like EV or semiconductor slows down due to slowdown in the global economy, then there will be a direct impact on the industrial demand for silver, due to which the prices may come down. Apart from this, if a cheaper and better alternative to silver is found in the industry, there could be a big drop in its demand, which could pull down the prices rapidly. There have been approximately 12 million ounces withdrawn from silver ETFs (Exchange-Traded Funds) in October 2025, which indicates that investors are pulling their money out at higher prices, and this could put downward pressure on the market.
So will silver shine again in the long term?
Even though there is a possibility of a fall in silver prices in the short term, the long term picture looks completely different. Experts believe that this time the silver boom is different from the earlier boom (1980, 2011), which was based only on speculation and later collapsed badly. The foundation of the current boom is based on the real and continuously growing demand from industries like technology and green energy. Motilal Oswal’s report estimates that by 2027, silver prices may touch the level of Rs 2,46,000 per kg. A major reason for this is the increasing gap between supply and demand. Production from mines is lagging behind demand, due to which there is a shortage of silver globally. Therefore, even though buyers may get some relief after Diwali, silver may remain a bright investment in the long run.