Silver rockets past $60: What’s driving the melt-up and what 2026 could look like

Silver has touched records this week, crossing $60 an ounce for the first time in history, marking a landmark moment for the precious metal. After years of steady gains, 2025 has been extraordinary, with silver prices surging on the back of strong industrial demand, persistent supply deficits, and global economic uncertainties. The rally has echoed in India as well, with MCX futures scaling unprecedented highs above ₹ 2 lakh per kilogram. This meteoric rise underscores silver’s dual role as both an industrial staple and a safe-haven asset, setting the stage for intense market speculation and questions about what lies ahead in 2026.

Why did silver rally so sharply in 2025?

Structural supply tightness

The Silver Institute’s latest report shows that the silver supply remains tight with the market running multi-year deficits. In 2024, the shortfall was about 149 Moz, and another deficit was projected for 2025 as industrial demand hits fresh highs. Inventories at key hubs have thinned, and several reports noted low inventories in China and tight conditions in London following autumn squeeze.

Macro tailwinds

Markets are pricing further U.S. rate easing, which typically weakens the dollar and reduces the opportunity cost of holding non-yielding assets like silver; that backdrop has been central to the breakout through $60.

Industrial-and-investment demand

Silver’s dual identity mattered more than usual: ETF inflows ballooned into the spike, while industrial demand like solar PV, electronics, EVs, and data-center hardware kept the physical market tight.

Global demand & supply

According to the World Silver Survey 2025, industrial fabrication set records, led by photovoltaics and electronics. Mine supply remains stubbornly inelastic because 70–80% of silver is produced as a by-product of base-metal mining. Recycling rose, but not enough to close the gap, and survey data indicate continued deficits into 2025.

Geopolitics and the gold surge: spillovers to silver

Gold’s explosive rally exerted a “gravitational pull” on silver, compressing the gold–silver ratio from extreme highs and dragging relative value seekers into the white metal. Geopolitical risk—from wars to tariff frictions—pushed investors toward save haven assets. Silver benefited both as a monetary hedge and as a critical input to the clean-energy and tech supply chain.

U.S. tariffs & the U.S. dollar

The 2025 tariff regime raised the average effective U.S. tariff into double digits and disrupted supply chains, causing a weaker U.S. dollar and higher goods prices. These conditions historically support dollar-denominated commodities like silver. Though silver wasn’t a direct target in the tariffs war, the reciprocal tariffs from other countries rerouted industrial supply chains that indirectly tightened the silver balance. In short: tariff-driven frictions plus a softer dollar reinforced the bullish setup rather than undermining it.

India’s domestic demand supports silver

India has seen a key demand shock. Industry voices and data cited surging imports and strong physical premiums, even at record rupee prices, due to high demand. With solar capacity targets and electronics manufacturing expanding, the industrial demand for silver has increased significantly. In addition, tight local supply and rising festive-seasonal buying pushed the key MCX futures prices over Rs 200, 300per kg this week.

Volatility, speculation, and price outlook

Silver’s market is small and leveraged, so positioning swings can be sharp. High ETF inflows, COMEX delivery stresses, and thin liquidity have pushed silver prices above $60, but there are potential triggers for air-pockets if sentiment flips.

Is a major correction possible? Yes—silver’s history suggests 20–30% pullbacks are normal within secular uptrends, especially after vertical moves. A firmer dollar, fewer Fed cuts than expected, or a pause in PV/EV demand could trigger a correction in prices in the coming months.

However, institutional outlook suggests that after a strong rally in 2025, precious metals may enter a consolidation phase in early 2026 before resuming their upward trajectory. Gold is expected to lead this trend, with silver following closely. The structural supply deficits and high industrial and investment demand indicate that long term outlook remains bullish even though near term cooling remains a risk.

(The author is Head of Commodity Research, Geojit Investments)