Silver prices may spike 20% on the back of bullish global cues

Bengaluru: Silver prices are likely to go up over 20% in the next few months, as demand for the white metal is surging exponentially due to a strong investor and bullish global sentiment. The prices have gone up by 161% in 2025, and are currently ruling at Rs 3 lakh per kg mark.

“For the last five years, global silver demand has exceeded supply, creating consecutive deficits due to surging industrial use,” Tata Mutual Fund said.

Explaining the sharp rise in silver prices, Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, said, “Silver has the combined status of industrial and precious metal, which makes it more attractive. Silver surged with strong industrial and investment demand, combined with steady supply levels, pushing the silver market into multiple years of deficit, and this trend will likely persist this year as well.”

Going by the current trend, analysts expect the prices to surge beyond the Rs 3,60,000-mark this year.

“Silver is also considered a precious metal, with factors like falling interest rates, mounting fiscal concerns, and broader economic uncertainty prompting investors to shift toward safe-haven and higher-yielding assets,” he stressed.

The spectacular rally in silver is driven by powerful structural and macroeconomic forces that continue to support the prices. The metal has been in a deep supply deficit for five consecutive years, with global inventories shrinking as industrial, manufacturing, and investment demand outpace output. This imbalance is expected to persist into 2026, reinforcing bullish momentum, Hareesh V, Head of Commodity Research, Geojit Investments Limited, said.

Analysts also point to a recent supply squeeze in China, which has added to market concerns, especially as demand for silver in green energy, electric vehicles, and AI continues to rise sharply.

China’s new restrictions on silver exports, effective January 1, 2026, have disproportionately affected smaller exporters and further restricted the flow of Chinese silver into global markets that are already grappling with tight supply conditions. At the same time, the US has formally designated silver as a critical mineral — a move that significantly alters market dynamics. In 2025, the global silver market faced a significant structural deficit, with demand exceeding supply by about 117.6 million ounces.

Experts caution against excessive exposure to silver over gold, warning that silver prices tend to correct more sharply during downturns. “Recently, there was a signal that silver is overbought, which means the ratio has gone up to 67, which is very high for the white metal. Ideally, it should be in the range of 61-62,” said Naresh Chetan, Managing Director of Zaveri Brothers Diamonds & Gold.

The gold-silver ratio measures how many ounces of silver are required to purchase one ounce of gold and is commonly used by investors to assess relative valuation, market trends, and potential trading opportunities between the two metals.

Reiterating that silver appears overbought, Chetan said, “Being in the business of reading charts for over 40 years, I have now seen we are reaching an overbought position for silver, while gold might still have some space to go up.”

However, he cautioned that silver prices may correct in 2026, falling faster than gold. “While the yellow metal would fall 5%, the white metal would fall 25%,” he predicted.