HYDERABAD: The custom of gifting a newborn a silver spoon and feeding bowl is becoming less common in Telangana, as rising silver prices, amid a widening gap between demand and supply, are making age-old practices costlier for middle-class families. What was once a routine purchase tied to birth rituals is now being postponed, scaled down or avoided altogether, according to jewellers and bullion traders.
Silver prices have climbed sharply, prompting both consumers and investors to reassess their approach to the metal. On Friday, January futures on the Multi Commodity Exchange (MCX) closed at Rs 2.87 lakh per kg, while spot prices in major cities such as Delhi, Mumbai, Chennai and Hyderabad hovered around Rs 2.8 lakh per kg.
Market participants caution that prices remain volatile and advise buyers and investors to conduct their own research rather than rely on short-term price movements. The steady rise over the past year has altered buying patterns across jewellery shops and bullion markets, particularly among middle-income households that traditionally purchased silver for household use and ceremonies.
Silver, which was trading near Rs 68,000 per kg in early 2024 and around Rs 90,000 per kg in early 2025, has touched record levels in recent weeks. Jewellers say this has sharply reduced demand for traditional silver articles such as utensils, coins and bars, which are now considered unaffordable by many buyers.
“Regular silver items like utensils, coins and bars are not moving at all now. They have gone completely out of reach for middle-class families,” said Rajesh Agarwal, a silver trader in Hyderabad’s bullion market. “People are not buying for consumption anymore. They are either waiting or looking at jewellery with lower ticket sizes.”
While consumption of traditional items has weakened, silver jewellery has shown relative resilience. With gold prices remaining high, silver jewellery has gained ground as an alternative for weddings, gifting and daily wear, particularly among younger buyers.
“Gold jewellery sales have dipped. At these prices, people are not coming forward to buy heavy gold ornaments,” said Meena Shah, owner of a jewellery store in Secunderabad. “Instead, customers are opting for silver jewellery. It looks elegant, is wearable, and still fits within a manageable budget.”
‘Global demand resulting in changes’
Market analysts say the ongoing rally is being driven less by retail buying and more by structural changes in global demand. Industrial use now accounts for about 59% of total global silver consumption, with applications ranging from solar panels and electric vehicles to electronics, artificial intelligence hardware and other green technologies.
“Industrial consumption of silver has risen sharply, and much of it is non-recoverable,” said Rajesh, who also tracks commodity markets. “At the same time, global production has not kept pace. This mismatch is shrinking global silver stocks year after year, which is why prices have moved the way they have.”
Based on these trends, analysts estimate that silver prices could reach $300 per ounce over the next four to five years. In Indian terms, this would translate to roughly Rs 9 lakh to Rs 9.5 lakh per kg, assuming currency and other variables remain broadly stable. However, experts warn that this does not imply a smooth or uninterrupted rise.
“Just because silver has moved from around Rs 90,000 to current levels does not mean the story is over,” Rajesh said. “But after such a steep rally, short-term corrections are very much possible. Prices can retrace by Rs 30,000 to Rs 50,000 per kg over a few weeks.”
As a result, advisers are increasingly recommending a staggered approach. Short-term participants are being advised to wait for corrections, while long-term investors are being told they can either enter gradually or use price dips to accumulate, keeping volatility in mind.
Prem Soni, a financial analyst, said the recent surge reflects a combination of long-standing supply deficits and shifting global financial conditions. “Silver has been used in industry for decades, but what has changed is the scale,” he said. “Unlike gold, silver is consumed. Once it is used, it does not easily return to the market. Expectations of lower interest rates, a softer dollar and inflation hedging brought investors back to hard assets, where silver typically moves faster than gold.”
Market finally reacts to supply-demand imbalance
Soni said the supply-demand imbalance existed well before prices began rising. “What we are seeing now is the market finally reacting to stress that was ignored for years,” he said, adding that speculative money entered after prices crossed key levels, amplifying the move rather than causing it.
He also pointed to a shift in silver’s long-term price behaviour. “For nearly 45 years, silver delivered almost zero real returns in dollar terms, repeatedly failing near the same ceiling and never crossing $49. What Indian investors saw as returns was largely rupee depreciation, not silver strength. This time, silver has broken above that level on a sustained basis, which changes the nature of the cycle,” he said.
At the same time, Soni cautioned that volatility remains a defining feature of the metal. “When speculation enters, risk often gets ignored. Silver can overshoot on the upside, but history also shows that sharp corrections follow,” he said. Potential triggers for a pullback include changes in interest rate expectations, a rebound in the dollar or overcrowded positions. “Corrections usually come from sentiment shifts, not from changes in fundamentals.”
‘Physical ownership creates discipline’
Another analyst, Bhavin Shah, said retail participation in silver is increasing in India, though the form it takes differs from Western markets. “While ETFs and digital platforms are seeing inflows, Indians still prefer physical assets,” he said, noting that bars, coins and jewellery continue to dominate demand.
“There is a behavioural reason for this,” Shah said. “Physical ownership creates discipline. On a screen, profits tempt people to sell quickly. But when silver is held as jewellery or bars, families tend to hold through cycles. That holding behaviour has shaped Indian demand for decades.”
Additionally, experts said the proposed tariffs on European countries over Greenland could escalate geopolitical tensions and deepen global uncertainty, potentially triggering another surge in gold and silver prices.
They added that the developments could also favour the Indian stock market, as India and the EU are in the final stages of FTA negotiations. Following US President Donald Trump’s tariff threats against EU countries, the supranational political and economic bloc and India are expected to fast-track FTA discussions in an effort to conclude the deal.
Investors today can access silver through physical purchases, exchange-traded funds, digital silver and futures, each carrying different risk and liquidity profiles. Analysts say the main risk for retail investors during strong rallies is ignoring past cycles. In earlier bull runs, particularly in 2006 and 2011, many late entrants suffered heavy losses after prices reversed, especially those using leverage.
On the ground, jewellers say silver jewellery is creating a parallel market rather than replacing gold. Improved designs and finishes that resemble gold have expanded its appeal, though dealers note that the category is still underdeveloped compared to gold in terms of craftsmanship and scale.
As prices remain elevated and volatile, the silver market is increasingly being driven by investment logic rather than household consumption. Traditional ritual-linked purchases are giving way to cautious buying and long-term positioning, reshaping the role silver plays in both homes and portfolios.