Silver hits record Rs 2.06 lakh/kg: what’s driving the rally and what lies ahead

Silver prices surged to a historic high of Rs 2,06,111 per kilogram on the Multi Commodity Exchange (MCX) on Wednesday, extending their bullish momentum, which was seen this year, amid strong global cues, macroeconomic shifts, and structural industrial demand.

Internationally, silver crossed the $66 per ounce mark, a fresh all-time high, as investors rotated into tangible, non-yielding assets following a mixed US jobs report.

The rally comes at a time when silver has not only outperformed gold but has also surpassed the price of crude oil, a rare inversion not seen since the 1970s.

Factors driving the silver rally

Aamir Makda, Commodity and Currency Analyst at Choice Broking, attributed the rally to rising unemployment in the US (now at 4.6%), which increases the likelihood of a Federal Reserve rate cut in 2026—making non-yielding assets like silver more attractive.

"Silver prices overtaking crude oil for the first time in 40 years sends a clear message: the future belongs to the tangible, the critical, and the rare," he said.

He highlighted that the crossing of the $65 threshold marks the dawn of a new era for silver.

Additionally, V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that silver has returned nearly 80% in the past year, outperforming gold.

“What sets silver apart is its wide application in industrial uses. In sunrise industries like EVs, solar energy, and electronics, silver plays a critical role,” he said. He added that the supply of this scarce metal hasn't kept pace with demand, pushing prices higher.

"There can be some profit booking, but silver prices are likely to remain resilient," he said.

Jigar Trivedi, Senior Research Analyst - Currencies & Commodities, at Reliance Securities, also echoed the supply-side concerns. “Silver is already in its fifth consecutive year of supply deficit. Adding to that, weakness in the Indian rupee has accelerated the price of dollar-denominated commodities,” he explained.

Justin Khoo, Senior Market Analyst - APAC at VT Markets, pointed out that the rally above Rs 2.05 lakh/kg and $65/oz has entered a new phase where risk management is critical. “Silver may break the all-time high again before retracing and then moving up again, reflecting the strength of underlying momentum,” he said.

He noted that the rally has been driven by global rate cuts, liquidity, a softer dollar, and structurally strong industrial demand. However, Khoo also cautioned that the pace of gains could lead to a healthy consolidation or corrective phase, rather than signalling a breakdown in trend.

What lies ahead?

With silver currently trading above major support levels, analysts maintain a bullish bias in the medium term. On the global charts, silver has finally crossed the crucial $65 (~Rs 2,01,000) resistance, with the next levels to watch being $67 (~Rs 2,08,000).

In rupee terms, immediate support is seen near Rs 1,94,000/kg, while key resistance stands at Rs 2,08,000/kg, according to Renisha Chainani, Head of Research at Augmont.

She attributes the continued rally to strong industrial demand, global supply mismatch, and safe-haven inflows.

On the technical side, Jigar Trivedi noted that the Indian market’s key levels remain Rs 2,08,000/kg and Rs 2,10,000/kg on the upside.

As the industrial and monetary dynamics evolve, silver appears to be continuing a structurally bullish phase. While short-term corrections are possible, the underlying trend continues to find support from macroeconomic and sectoral shifts, placing the metal firmly in the spotlight for both investors and analysts.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)