Silver Prices Surge Over 157% Year-To-Date: Too Late To Buy or More Steam Left

The surge in gold and silver prices has dominated investment-related conversations in 2025. Silver’s historic rally and a similar surge in gold have shifted investor interest towards the commodity space in a major way. Even as the calendar year edges towards its close, silver prices have recorded a fresh all-time high.

On December 23, spot silver prices breached the $70 per troy ounce mark for the first time. On December 24, silver futures mirrored the gains. Silver Futures with March 5, 2026, expiry surged to a record high of Rs 2,24,300 per kilogram. Physical silver prices have also witnessed a significant surge to Rs 2.33 lakh per kilogram.

So far in 2025, physical silver prices have surged by over 170.8 per cent. On the MCX, Silver prices have surged 157.12 per cent. Amid this strong surge, retail investors are left wondering whether they should buy and hope for potential future gains or wait for a cooling-off period. However, before making any investment decision, it is crucial to understand the triggers that have buoyed silver to fresh record highs.

What is Driving Silver’s Surge

Silver prices have surged globally, with the surge being even more pronounced in India due to a weakening Indian rupee. Key drivers of the white metal’s rally include industrial demand and strong investment demand. On December 24, the rally continued as the spot price of silver surged 1.72 per cent over the previous close to $72.7055 per troy ounce. On the other hand, silver futures gained 2.11 per cent over the previous close to touch a record high of Rs 2,24,300 per kilogram.

While a significant surge in gold has been driven by its safe-haven appeal amid uncertainty around trade policies and geopolitical conflicts, silver’s rally is driven by its dual appeal as a precious metal and as a crucial component for several industries. Most recently, the release of the US GDP data on December 23 and currency fluctuations have contributed to the extension of silver’s rally in today’s trade.

Shift In Investment Towards AI

The US Bureau of Economic Analysis’ (BEA) initial estimate for Q3 2025 GDP of 4.3 per cent was driven by continued robust investment by businesses in artificial intelligence (AI) technologies, according to a report by Ernst & Young released on December 23. The report stated that the US expenditure outlook continues to be led by strong AI investment. Equipment investment grew by 5.4 per cent, led by strong outlays on information processing equipment.

This category includes the servers and hardware essential for AI data centres. EY mentioned that private investment in factories contracted by 6.3 per cent in Q3, while high-tech and AI-led investments emerged as primary pillars of support. An expansion vis-à-vis AI and tech shows strong demand for silver due to it being indispensable for manufacturing information processing equipment such as printed circuit boards (PCBs), semiconductors, and sensors.

Green Energy Boost

According to a report by the Clean Investment Monitor (CIM), a joint project of Rhodium Group and MIT, that monitors spending on clean energy, private investment in clean energy and manufacturing reached record levels in 2025. Additionally, a report by BloombergNEF (BNEF), a strategic research platform, showed that global solar investment reached $252 billion in the first half of 2025, with a major portion allocated to the U.S. grid.

Crucial hardware used in the green energy transition includes solar panels, inverters and other hardware which is used to control the power grid, which uses silver. A rise in investment in green energy indicates strong demand for the metal, pushing its prices higher amid a five-year supply deficit.

Rupee-Dollar "Double Whammy"

On December 24, the US Dollar Index was trading close to an 11-week low, hovering around the 97.87 – 97.91 range, indicating a softening US Dollar. International buyers tend to buy silver in dollars but hold other currencies. A weakening dollar makes silver relatively cheaper for investors who have Euros, Yen, or Yuan, triggering a surge in buying volume across the globe.

Closer to home, the weakening rupee makes silver more expensive, despite a softening dollar. Rising global prices, combined with a weak rupee, lead to higher demand for silver on the MCX, as Indian investors pay more for it.

What This Means for Retail Investors

Silver’s rally has rewarded Indian investors with a 150 per cent surge so far in 2025. However, newer investors are likely to be fearful of entering the market at current levels with concerns around the sustainability of the rally. Aamir Makda, Commodity & Currency Analyst, Choice Broking, told Outlook Money that China’s export controls, which are set to come into place on January 1, 2026 and the US Federal Reserve’s future rate cuts are expected to boost silver prices in 2026.

“There are notable reasons which we have witnessed a rally in the Silver price in 2025. The silver price has increased by more than 150 per cent so far. These reasons will boost Silver prices in 2026 as well. China will implement strict export controls on silver beginning January 1, 2026, requiring licenses for exporters, potentially constricting supply to Western markets. Concurrently, heightened demand for silver from AI data centers, which use significantly more silver for components, is expected as global data center capacity nearly doubles. Anticipated Federal Reserve interest rate cuts may make silver more attractive as a non-yielding asset amidst dollar weakness,” Makda said.

Makda urged investors to maintain a mixed approach towards buying silver. He urged investors to await a dip in prices towards the Rs 1,95,100 per kg level.

“Here, Investors should keep a mixed approach to invest in Silver. In our view, investors should buy at current levels and should wait for a correction towards the support levels to add. Immediate support level would be at 20-DEMA level placed at Rs 1,95,100, and correction towards this level will give buy-on-dips opportunity,” Makda said.

Silver prices have more than doubled in 2025. Mean Reversion is a theory which suggests that prices tend to return to their long-term average (or mean). Since the metal is currently trading far above its historical averages, a "reversion to the mean" is a significant risk, especially for new buyers.

Makda believes that there could be a high risk of a 2-3 year flat or declining market because of factors like potential “Silver flood” due to inventory recovery and industrial thrift. However, silver’s structural deficit and a ‘supply cliff’ are likely to lower the chances of a mean reversion.

“Historically, Silver is one of the most volatile commodities and concern regarding a mean reversion or multi-year digestion period is quite valid. On one hand, there could be a high risk of a 2-3 year flat or declining market because of factors like potential “Silver flood” due to inventory recovery, industrial thrift pressures leading manufacturers to reduce silver usage, and profit-taking by institutional investors, causing significant price drops. On the other hand, structural shifts have occurred, with a persistent physical shortage leading to deficits and production delays, creating a "supply cliff." Additionally, the gold-to-silver ratio is highlighted, indicating that if it reverts to its historical average, Silver could significantly outperform Gold,” Makda said.