Silver Shines Bright: Key reasons behind the surge and crucial levels to track
Silver prices have captured investor attention once again, rallying strongly in recent weeks and breaking through key psychological barriers. On Thursday, silver futures surged by ₹ 715 to ₹ 1,06,107 per kilogram on the Multi Commodity Exchange (MCX), reflecting a 0.68 percent gain. The July delivery contract saw heightened activity, with over 19,000 lots traded, suggesting rising speculative and institutional interest.
Globally too, silver traded higher at USD 36.31 per ounce in New York, continuing its upward trajectory near multi-year highs. Analysts attributed the rally to a fresh build-up of positions as traders and investors sought exposure to the white metal amid macroeconomic and geopolitical uncertainties. With silver hovering near historic resistance levels, market experts are advising a strategy of buying on dips, especially given the structural tailwinds supporting long-term demand.
Silver's rally is not merely a speculative play but is being supported by robust fundamentals. Industrial demand has seen a consistent rise, particularly from clean energy applications such as solar panels and electric vehicles. According to the World Silver Survey, industrial consumption reached a record 681 million ounces in 2024, up 4 percent from the previous year. Importantly, solar-related demand alone is projected to grow from 5,671 tonnes in 2024 to 7,488 tonnes by 2029, indicating the white metal's critical role in the green energy transition.
Investor interest is also growing steadily, with exchange-traded funds (ETFs) witnessing inflows of over 300 tonnes in June—almost double compared to the previous month. A softening dollar and cooling inflation have contributed to renewed interest in precious metals, positioning silver as both a growth asset and a defensive play in portfolios. The global supply of silver, meanwhile, remains constrained, further adding to the bullish sentiment.
Riya Singh, Research Analyst at Emkay Global Financial Services, noted that silver has significantly outpaced gold over the past week. While gold rose a modest 0.6 percent, silver surged more than 9 percent, narrowing the year-to-date performance gap between the two metals. Both are now up nearly 25 percent in 2024. ETF positioning, technical breakouts, and safe-haven buying amid trade tensions have all played into silver's hands, Singh added. Notably, the gold-silver ratio has declined from over 100 in April to around 92, suggesting silver has more room to rally before reaching historical parity levels.
Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, emphasized that silver's recent breakout above ₹ 1,01,000 is not a fleeting move. Historically, such breakouts have led to significant follow-through rallies. In 85.7 percent of past instances, silver has delivered positive 12-month returns post-breakout, with an average gain of 26.1 percent. Even over 3- and 6-month periods, the strike rates have been an impressive 61.5 percent and 55.5 percent, respectively.
According to Sheth, this breakout marks the end of a prolonged consolidation phase and indicates the beginning of a fresh momentum cycle. He believes macro tailwinds like geopolitical tensions, liquidity shifts, and central bank policy pivots will continue to provide fertile ground for silver to outperform. The rally is being driven by both retail and institutional investors, making the current setup structurally bullish.
Silver's rally appears to be more than just a speculative bounce. Backed by strong industrial demand, investor inflows, and favourable macroeconomic indicators, the metal has reasserted its relevance as both an industrial commodity and a store of value. With technical charts flashing green and analysts pointing to more upside potential, silver may be poised to outperform in the coming months. As analysts continue to advise accumulating on dips, investors looking to diversify their portfolios may find an opportunity in this white metal's ongoing surge.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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