The spectacular surge in silver prices has eclipsed the performance of every other major asset class in 2025. On Friday, December 26, the white metal scaled unprecedented peaks in both international and domestic markets, showing no indication of halting its remarkable ascent.
What's Fueling the Meteoric Rise of Silver?
In global markets, silver prices leaped nearly 5% to breach the $75 per ounce mark for the first time ever. This rally is powered by anticipations of additional interest rate cuts by the US Federal Reserve and escalating geopolitical uncertainties. Mirroring this trend on the domestic front, silver futures on the Multi Commodity Exchange (MCX) surged 4% to a historic high above ₹2,33,000 per kilogram.
This year's powerful momentum adds to a pattern of positive returns for silver investors over the past four consecutive years. Multiple fundamental forces are converging to drive this bull run.
Key Drivers: From Fed Policy to Industrial Demand
The primary catalyst is the expectation of monetary policy easing in the United States. Despite the Fed's dot plot indicating just one potential cut for the next year, market hopes for more aggressive easing remain high, enhancing the appeal of non-yielding assets like silver.
Furthermore, silver is benefiting from safe-haven investment flows. Global uncertainties, including tariffs imposed by former US President Donald Trump and the ongoing Russia-Ukraine conflict, have prompted investors to seek refuge in precious metals.
A critical and persistent factor is a significant mismatch between supply and demand. Prathamesh Mallya, DVP Research - Non Agri Commodities and Currencies at Angel One, points out that silver has been in a structural deficit for seven consecutive years, a fundamental reality justifying the 2025 rally.
Industrial consumption is a major demand pillar, sourced from solar panels, electronics, electric vehicles, and various high-tech applications. The global push for solar adoption, renewable energy, EV expansion, and electronics production has sharply increased industrial demand in 2025. With supply unable to keep pace, the price ascent has intensified.
Aamir Makda, Commodity & Currency Analyst at Choice Broking, highlights the severity of the deficit. The market is witnessing its fifth straight year of imbalance, with 2025 estimated to see a shortfall of 95 to 125 million ounces. Since 2021, the cumulative deficit has reached a staggering nearly 820 million ounces.
Is the Rally Sustainable? Analysts Weigh In
Propelled by these tailwinds, silver has delivered a staggering 166% return in the domestic spot market over the past year. While these gains appear dramatic, analysts suggest they are not purely speculative euphoria, though near-term corrections are possible.
Choice Broking's Makda believes the supply-demand dynamics support sustainable gains. He maintains a 'Moderately Bullish' stance for the upcoming year. On the international front, he identifies an immediate technical target at $91 per ounce. For the Indian market, he projects silver prices could rise to ₹277,000 per kg in the short-to-medium term.
Justin Khoo, Senior Market Analyst - APAC at VT Market, offers a note of tactical caution. "Silver’s higher beta means the rally seems tactically stretched. Near-term corrections are likely, especially after such a steep ascent, but these should be viewed as consolidations rather than trend reversals unless inflation fears or fiscal risks fade meaningfully," he stated.
For new investors, however, entering at current lofty levels carries risk. Angel One's Mallya cautions that while three-digit returns in 2025 open the door for higher targets, the market is in uncharted territory. "Investors looking to enter at current levels must know that excessive price volatility can lead to a meaningful correction, as has happened in previous market crashes of silver," he advised.
Mallya outlines a potential downside target of ₹150,000 per kg in case of a trend reversal, while his upside target for 2026 stands at ₹275,000 per kg.
Disclaimer: This analysis is for educational purposes only. The views and recommendations are those of individual analysts or broking firms. Investors are strongly advised to consult certified experts before making any investment decisions, as market conditions are subject to rapid change.
