CHENNAI: Silver has crossed a historic milestone in the Indian market, breaching the Rs 2.5 lakh per kilogram mark for the first time, underscoring the extraordinary momentum that has gripped the white metal over the past year. The rally reflects a convergence of global macroeconomic shifts, tightening supply dynamics and intensifying industrial demand, even as questions grow louder over how much further prices can climb from these elevated levels.
The latest surge has been driven primarily by strength in global markets, where silver prices have scaled record highs, buoyed by expectations of easier monetary policy in the United States. With inflation showing signs of moderation and economic growth slowing in key economies, investors are increasingly pricing in interest rate cuts in 2026. This has weakened the US dollar and pushed real yields lower, creating a supportive backdrop for precious metals. Silver, which often amplifies the moves seen in gold, has benefited disproportionately as investors seek both a hedge against macro uncertainty and exposure to a metal with strong industrial relevance.
Unlike gold, silver straddles the line between a precious metal and an industrial commodity, a dual identity that has played a central role in its recent outperformance. Demand from sectors such as solar energy, electric vehicles, electronics and advanced manufacturing has continued to rise steadily. The global push towards renewable energy and electrification has made silver a critical input, particularly in photovoltaic cells, where usage remains difficult to substitute without compromising efficiency. This structural demand has lent durability to the rally, distinguishing it from purely speculative upswings seen in the past.
On the supply side, constraints have added further fuel to the price surge. Global silver production has struggled to keep pace with demand, in part because a significant portion of supply comes as a by-product of mining for other metals such as zinc, lead and copper. This limits the industry’s ability to respond quickly to higher prices by ramping up output. Any disruptions, whether logistical or policy-related, tend to have an outsized impact on availability, tightening the physical market and reinforcing bullish sentiment.
Investor participation has also intensified, with increased interest in futures, exchange-traded products and physical holdings. As prices broke successive resistance levels, momentum-driven buying accelerated, pushing silver into uncharted territory in the domestic market. The breach of Rs 2.5 lakh per kilogram has strong psychological significance and has drawn fresh attention from traders and retail investors alike, further amplifying volatility.
Safe-haven demand, rising industrial usage and structural supply deficits mainly drive the prices, say market watchers.
"Silver continues to dominate the precious-metals space, significantly outperforming gold in this cycle. COMEX Silver recently posted fresh all-time highs near $82.67 and is currently trading around the $80.40 per ounce region," says R Ponmudi, CEO, Enrich Money.
The rally is being driven by a powerful combination of safe-haven demand, accelerating industrial usage, and persistent structural supply deficits. The impulsive bullish structure remains intact, with corrections staying brief and contained. Upside potential now points toward the $84–$87 zone, while strong support lies between $75 and $72. Silver is on track for one of its strongest annual performances in decades, he added.
However, the sharpness of the rally has also raised concerns about sustainability in the near term. Silver is historically more volatile than gold, and steep advances are often followed by periods of consolidation or sharp pullbacks. At current levels, the metal appears stretched on several technical measures, increasing the likelihood of profit-taking. Any shift in expectations around global interest rates, a rebound in the dollar or signs of demand softening from key industrial users could trigger corrections, even if the broader trend remains intact.
That said, the longer-term outlook continues to find support in fundamentals. If monetary easing unfolds as anticipated and industrial demand linked to energy transition remains robust, silver could retain its upward bias despite intermittent setbacks. Market participants increasingly view the metal not just as a hedge, but as a strategic asset tied to future-facing industries, a perception that could underpin prices over a longer horizon.
In the immediate future, the silver market is likely to remain volatile as it digests recent gains and tests investor conviction at record highs. While the breach of Rs 2.5 lakh per kilogram marks a defining moment, the path ahead may not be linear. The rally can run further if macro and structural drivers stay aligned, but sharper swings and corrective phases are an inherent part of silver’s journey, especially after such an exceptional run, believes Ponmudi.