Silver prices rose by ₹2,400 to hit a new high of ₹1,94,400 per kg in the national capital on Thursday. All India Bullion Association says that the reason behind this surge is the weakness of Indian Rupee along with global cues and the effect of cut in interest rates by the US Federal Reserve. According to PTI news, there was a sharp jump of ₹ 11,500 in silver prices on Wednesday, after which it reached a historic level of ₹ 1,92,000 per kg. On the other hand, in the local bullion market, the price of gold of 99.9 percent purity increased by ₹90 to ₹1,32,490 per 10 grams, which is a slight increase from the previous price of ₹1,32,400 per 10 grams.
Reason for increase in silver prices
Since the beginning of the calendar year, silver has registered a huge rise of ₹ 1,04,700, or 116.72 percent, from ₹ 89,700 per kg on December 31, 2024. HDFC Securities Research Analyst Dilip Parmar said that silver prices reaching record high is due to strong physical and investment demand. Factors like tight supply situation, record international silver prices and weak rupee are playing a major role in increasing silver prices in the domestic market.
Silver overtook gold this year
Parmar said that this year silver has overtaken gold in terms of returns. This is due to reduced global supply, continued high demand from China and increased industrial consumption. Spot silver prices are showing strong bullish momentum in the domestic market, and it may touch ₹2,10,000 per kg in the coming days.
Movement in global market also
In the global market, spot gold fell 0.37 per cent to $4,213.12 an ounce, while spot silver gained for the third consecutive time, rising $1.06 or 1.71 per cent to $62.88 an ounce. So far this year, silver has registered an increase of $33.91, or 117.06 percent, from $28.97 per ounce on December 31, 2024.
Metals rise due to Federal Reserve’s rate cut
Harish V, Head of Commodity Research, Geojit Investments Ltd, said the US Federal Reserve’s decision to cut rates by 25 basis points and inflationary pressures have strengthened the positive sentiment in precious metals. Low rates reduce the opportunity cost of holding non-yielding assets like gold and silver, thereby attracting new investment flows. He further said that while bullion is already at record highs, this policy change further accelerates the rally, as investors look for safe assets amid economic uncertainty and inflationary pressures.
Prices got support from soft dollar and strong demand for silver
Harish V said the weakness of the US dollar is also supporting gold and silver prices, as a soft dollar is making these metals cheaper for global buyers. He also said bullion’s sharp rise is supported by structural supply deficits, strong industrial demand for silver and sustained ETF inflows.
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