Fueled by China’s stimulus, beginning of the Fed’s easing cycle, and rising industrial demand, silver prices have touched fresh record highs above Rs 94,000-mark with experts now predicting a climb to Rs 1 lakh/kg by late 2024 or early 2025.
With buying momentum remaining strong in international markets as well for the past few weeks, analysts believe the prices could see consolidated moves in the short to medium term.
“In the domestic markets, strong festive and wedding season demand starting from October onwards could push the prices towards the Rs 1 lakh mark by the end of the year or by the start of next year,” said Naveen Mathur, Director – Commodities & Currencies, Anand Rathi Shares and Stock Brokers.
Silver prices showed a stellar rally on Thursday up to their highest level in a decade on the back of China’s stimulus measures amid desperate attempts by the world’s largest consumer of white metal to shore up its economic growth. However, industrial sector demand remained a concern.
Spot silver both an investment asset due to its relationship with gold and an industrial metal – rose to $32.71 per ounce on Thursday in the international market, its highest since December 2012, and has gained more than 35% so far in 2024, leading the precious metals complex.
Here are the top 6 factors outlined to explain the rally in the white metal:
China stimulus
China has introduced its most aggressive stimulus measures since the Covid-19 pandemic to revive its economy, likely boosting demand for industrial commodities like silver, which has both precious metal and industrial uses.The PBOC’s monetary stimulus is expected to drive further investment in silver-intensive green technologies, particularly in solar panel production, enhancing the metal’s demand outlook.
Fed rate cuts
The US Federal Reserve implemented a larger-than-expected 50 bps interest rate cut in its September meeting, with FOMC members indicating that weakening labor market conditions and softening inflation could lead to further rate cuts.
Anticipation of more aggressive cuts has driven silver prices above $31 per ounce in the international market, their highest level since 2012. This rise is expected to impact domestic silver prices, which are likely to follow the gains in COMEX silver, maintaining strong upward momentum.
Use of the metal in EVs
Silver demand is closely tied to electric vehicle (EV) consumption due to its essential role in various components of EVs like electrical components, batteries and their charging infrastructure.
Use in solar panels
Silver is also used in solar panels, which are increasingly being pushed for clean energy solutions in the current times.
Festive demand
With the festive season around the corner, the demand for silver also jumps as it holds a cultural and religious significance being considered auspicious and is often bought during festivals such as Diwali and Dhanteras. Moreover, silver is a popular choice for gifting during festivals, and it is also seen as an affordable investment option.
Technical outlook
Once silver surpasses Rs 95,000/kg in the domestic market, a strong bullish rally is expected in silver prices that could push them up to Rs 1,00,000 and Rs 1,10,000 in the near term, says Rahul Kalantri VP of commodities at Mehta Equities.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)