Gold and Silver Prices Skyrocket to Record Highs in Mumbai Market
In a significant development for the domestic bullion market, prices of gold and silver soared to unprecedented levels in Mumbai on Tuesday, mirroring international trends observed over the extended weekend. This surge comes as global investors increasingly pivot towards haven assets, responding to persistently elevated geopolitical tensions that continue to unsettle financial markets worldwide.
Spot Market Reaches Historic Peaks Before Softening
During the trading session, gold in India's spot bullion market breached the critical Rs 1.6 lakh per 10 grams threshold, while silver climbed above the Rs 3.6 lakh per kilogram mark. Both metals achieved all-time high valuations, reflecting robust demand and market dynamics. However, in late trades, prices experienced a slight moderation as international markets witnessed a correction in precious metals. Gold, which had rallied to above $5,100 per ounce, and silver, which touched $114 per ounce, subsequently hovered below $5,100 and $108 levels, respectively.
Futures Trading Reflects Volatile Session
On the Multi Commodity Exchange (MCX), gold futures for February delivery were trading at approximately Rs 1.58 lakh per 10 grams, down from an earlier level of Rs 1.59 lakh. Similarly, silver futures for March delivery settled around Rs 3.6 lakh per kilogram, showing a marginal decline from Rs 3.65 lakh recorded earlier in the session. This volatility underscores the sensitive nature of precious metals to global economic indicators and investor sentiment.
Diverging Drivers: Safe Haven vs. Industrial Demand
The rally in gold is primarily attributed to its traditional role as a safe haven asset, coupled with diminishing confidence in the US dollar as a fiat currency amid economic uncertainties. In contrast, silver's impressive performance is powered by a confluence of factors, with industrial demand emerging as a key catalyst. Market analysts highlight that silver now derives nearly two-thirds of its demand from industrial applications, positioning it at the forefront of global energy and digital transformations.
Silver's Supply-Demand Imbalance and India's Role
Kotak Mutual Fund, in a blog post titled 'Silver is the new rare earth: The shiny metal changing our world', emphasized that rising demand from fast-growing sectors such as electric vehicles (EVs), semiconductors, solar energy, and smart grids is fueling silver's rally globally. This demand surge occurs against a backdrop of stagnant supply, as silver is largely mined as a by-product and ore grades are declining. The fund house projected a deficit of approximately 230 million ounces in 2025, leading to persistent market tightness.
Notably, India has emerged as the largest importer of refined silver in 2025, with imports valued at $9.2 billion—a staggering 44% increase year-on-year. This growth is driven by factors including substitution from gold, robust festive demand, and the expansion of solar and electronics manufacturing within the country. The combination of these elements underscores silver's evolving significance in both industrial and investment spheres.
As geopolitical tensions remain high and industrial advancements accelerate, the trajectories of gold and silver continue to captivate market participants, with Mumbai serving as a critical hub for these precious metals in the domestic context.
