In an unprecedented surge, the price of silver has shattered all previous records, soaring past the $70 per ounce mark for the very first time in history. This remarkable rally, fueled by a potent mix of global economic cues and severe supply constraints, has sent domestic prices on the Multi Commodity Exchange (MCX) to stratospheric new highs.
What's Driving the Meteoric Rise?
The rally is underpinned by a powerful convergence of factors. Escalating geopolitical tensions, particularly between the US and Venezuela, have bolstered the appeal of precious metals as safe-haven assets. Concurrently, a weakening US dollar index and growing market expectations of imminent interest rate cuts by the US Federal Reserve have made non-yielding assets like silver significantly more attractive to global investors.
On the domestic front, MCX Silver futures surged by 1.7% to an all-time peak of ₹2,16,596 per kilogram. In tandem, MCX Gold February futures climbed 1.1% to its own historic high of ₹1,38,300 for every 10 grams. Internationally, Spot Silver achieved a new intra-day pinnacle of $70.0055.
Supply Squeeze and Soaring Industrial Demand
According to experts and a recent note from Tata Mutual Fund, the market is grappling with a fundamental supply crisis. Mining disruptions and critically low inventories in key global hubs like London, China, and the US are creating severe shortfalls. This scarcity is colliding with robust industrial demand, primarily from the fast-expanding solar panel sector.
Policy moves are tightening the noose further. The United States has classified silver as a critical mineral, while China—the world's second-largest silver producer—has imposed stringent export restrictions. India's own appetite for the metal remains voracious, with imports surpassing 2,600 tonnes in just September and October 2024.
Tata Mutual Fund highlighted that the global silver deficit is now estimated at over 2,500 tonnes annually and could widen. They noted, "Silver is now up over 100% this year, driven by a shift toward alternative assets and expectations of a fifth consecutive annual supply deficit."
Expert Outlook: Boom Phase with Caution
As volatility risks emerge, analysts are assessing the sustainability of this explosive rally. Renisha Chainani, Head of Research at Augmont, pointed out that while silver's technical charts remain positive, the rally has entered a mature phase. She emphasized the cyclical nature of commodities, stating that silver is currently in a "boom cycle," which will inevitably be followed by a correction, though its timing is uncertain.
Chainani provided key levels to watch: "If silver continues its bullish momentum, the next targets are USD 72, roughly ₹222,000, while strong support lies near USD 64.50, or about ₹200,000." Her analysis warns that the scale of the current monthly rally suggests any eventual correction could be sharp, advising investors to tread carefully at these elevated levels.
