Silver prices on Multi Commodity Exchange (MCX) traded higher on Tuesday, hovering near its record high levels in line with gains in international bullion prices and strong demand. MCX silver rate rose 0.5% to above ₹1,26,200 per kg, after touching an all-time high of ₹1,26,730 in the previous session.
So far in 2025, silver prices have delivered over 45% returns, outpacing ’s 42% rally and significantly outperforming the Sensex’s 3.6% gain. In the global market, silver prices traded near $41.2 per ounce — their highest level since 2011 — as expectations of US Federal Reserve rate cuts boosted investor appetite for precious metals.
What’s Driving Silver Price Rally?
US Fed Rate Cut Expectations: According to CME Group’s FedWatch tool, traders are pricing in an 89.4% probability of a 25 basis point cut and a 10.6% chance of a 50 basis point cut at the Fed’s September meeting. Historically, gold and silver perform well in lower interest rate environments.
Weak US Dollar: The US dollar index fell to 97.323, its weakest level since July 24, making silver relatively cheaper for holders of other currencies and driving demand higher.
Industrial Demand: Over half of global silver demand now comes from industrial applications, particularly solar panels, electric vehicles, and electronics. With demand consistently outstripping supply for the fifth straight year in 2025, the market remains in deficit.
ETF Inflows: Silver-backed ETFs/ETPs recorded net inflows of about 95 million ounces in the first half of 2025 — surpassing the full-year total of 2024. Global silver ETF holdings now stand at a record 1.13 billion ounces, valued at over $40 billion, Axis Mutual Fund said in a note.
Futures Market Positioning: Net long positions in silver futures rose 163% between end-2024 and June 2025, reaching their highest level since early 2021, reflecting strong institutional bullishness, the brokerage note added.
Supply Constraints: With less than 30% of global silver mined from primary silver mines and limited growth in overall production, supply remains structurally tight.
Silver Price Outlook
“Expectations of a Fed rate cut, geopolitical tensions, and a weaker dollar are fueling safe-haven demand. At the same time, robust industrial demand and tight physical supply are supporting prices. The possibility of a short squeeze cannot be ruled out,” said Jigar Trivedi, Senior Research Analyst, Reliance Securities.
He added that retail investors are actively buying despite elevated prices, especially ahead of festivals and weddings.
Trivedi expects silver prices to test ₹1,30,000 – 1,33,000 per kg in the short term, with a year-end target of ₹1,40,000.
Axis Securities, meanwhile, sees global silver prices holding in the $40–42 per ounce range in 2025.
Analysts at Motilal Oswal Financial Services Ltd (MOFSL) remain bullish on silver in the medium to long term. They expect domestic silver prices to move towards ₹1,35,000, followed by ₹1,50,000 per kg, assuming the USD/INR exchange rate at 88.5.
On the international front, MOFSL projects silver on COMEX to test $45 per ounce, with the potential to move further towards $50.
The brokerage highlighted strong long-term support levels in the ₹1,04,000 – ₹1,08,000 range, advising investors to adopt a buy-on-dips strategy over a 12–15 month horizon.
The sharp rally in silver prices has been underpinned by a unique combination of safe-haven buying, industrial demand, ETF inflows, and constrained supply. While near-term volatility cannot be ruled out, analysts remain broadly bullish on the white metal, suggesting the uptrend may have further room to run.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.