Summary of this article
Silver surpassed $61 per troy ounce and Rs 1,91,800 per kg due to Federal Reserve rate-cut anticipation and its crucial role in green energy technology.
Industrial demand from solar PV and Electric Vehicles, which use significantly more silver, is driving a structural supply deficit.
Investors are advised to wait for a price correction but to consider increasing long-term allocation via Silver ETFs over physical metal.
To say precious metals have attracted investor interest in 2025 is an understatement. The historic surge seen in gold and silver prices in 2025 has ruled investor sentiment. However, before the end of the calendar year, silver delivered a historic breakout, making the precious metal appear as a standout performer among precious metals.
On December 10, the price of spot silver went past the $61 per troy ounce as it traded around $61.08, up by 0.16 per cent. So far in 2025, spot silver has surged 110.12 per cent, significantly outpacing gold’s 60 per cent surge.
On the MCX, Silver Futures with March 5, 2026, expiry surged nearly 2 per cent to a record high of Rs 1,91,800 per kg. At the time of writing, the futures traded around the Rs 189571 per kg level, up by 0.8 per cent. The price of physical silver also soared to Rs 1,99,000 per kg.
Why Is Silver’s Price Rising
The immediate rally comes ahead of the US Federal Reserve’s key policy decision announcement. With analysts anticipating and pricing in a 25-basis point rate cut, the demand for silver is higher as decreasing interest rates tend to increase demand for non-yielding precious metals. Additionally, the supply side also continues to witness tightness with Chinese inventories of the precious metal hitting decade lows. On the demand side, the price rise seen throughout the year has been backed by not just the metal’s safe-haven asset appeal but also its critically indispensable demand from multiple industries and a shift towards greener and renewable technology, according to a report titled ‘Silver, The Next Generation Metal’ by Oxford Economics.
“Silver is poised to play a pivotal “next generation metal” role across industries critical to the green energy transition and digital transformation over the coming decade. Silver’s unique properties make it an indispensable component in their development and expansion,” Oxford Economics said.
Santosh Meena, Head of Research at Swastika Investmart, told Outlook Money that silver’s extraordinary run is driven by surging demand from emerging sectors.
“Silver has had an extraordinary run, trading near $61/oz and up over 100 per cent year-to-date, driven by a fifth consecutive year of supply deficits and surging demand from the solar and AI/semiconductor sectors,” Meena said.
Solar PV and Renewable Energy Demand
Silver is an essential part of the transition to renewable energy. According to Oxford Economics’ report, silver demand from solar photovoltaics (PVs) comprises as much as 29 per cent of the total industrial silver demand. The report said that global solar capacity is estimated to grow at a 17 per cent Compound Annual Growth Rate (CAGR) by 2030.
Oxford Economics also stated that while there have been efforts to shift from silver to other metals, such as reducing silver content per solar cell, the use of high-efficiency, next-generation solar cells like Tunnel Oxide Passivated Contact (TOPCon) and Silicon Heterojunction (SHJ) consumes about 50 per cent more silver compared to older technologies. Thus, the demand is expected to increase as global solar capacity witnesses double-digit growth.
Electrification of Transport
Another major driver of industrial demand for silver is the automotive industry’s rising adoption of electric drivetrains. Oxford Economics stated in its report that a single Battery Electric Vehicle (BEV) uses between 67 per cent and 79 per cent more silver than a traditional internal combustion engine (ICE) vehicle.
What makes silver essential here is its high electrical and thermal conductivity, which enables power transmission and rapid charging. Oxford Economics anticipates global EV production to grow at a 13 per cent CAGR in the next six years, ultimately leading to EVs overtaking ICE vehicles as the key driver of silver demand in the automotive industry, as the primary source of silver demand within the automotive sector by 2027.
AI and Data Center Demand
The increasing use of artificial intelligence (AI) across domains and the increasing global data center capacity are also drivers of demand for silver. The precious metal is used in base solders, electrical contacts, and connectors necessary for the high-performance semiconductors which power AI software. Oxford Economics expects the geographic expansion of data centers to drive this demand.
“As demand for digital services expands to new regions, including Latin America, South Asia, and Africa, we expect data centre construction and silver demand to follow,” Oxford Economics said.
On the other end, the supply side of the silver market is presently in its fifth consecutive year of a structural supply deficit. As much as 70 to 80 per cent of silver is produced during the mining of other metals like copper, lead, or zinc. This constraint prevents a production ramp-up amid soaring prices, which in turn keeps supply highly inelastic and the market tight.
What Should Investors Do
As per Oxford Economics, the price rise in silver has a fundamental backing driven by projections of industrial demand. Amid the projected price rise and the current rally, it becomes important to understand how investors can approach the market.
Aamir Makda, Commodity and Currency Analyst, Choice Broking, told Outlook Money that investors looking to invest over the short to medium term should wait for a market correction before investing.
“Certainly, since the Silver price is trading at its all-time high level, currently trading over Rs. 190,000 per Kg, Investors should wait for a market correction to invest for the short to medium term. Looking at technical charts, the immediate support level would be at 20 and 50-DEMA levels placed at 171,610 and 158,134, respectively,” Makda said.
Makda added that investors can consider increasing their allocation towards silver to seek returns amid the chances of a continued rally led by industrial demand. However, he cautioned that gold continues to hold its safe-haven appeal.
“Allocating a portion from gold to silver is a strategic move, but it is primarily for growth, not safety. Silver's superior industrial demand from solar PV, electric vehicles, and electronics is driving record consumption, leading to persistent supply deficits. This imbalance suggests silver is structurally undervalued against gold, as reflected by the current Gold/Silver Ratio normalising toward its historical average, currently at 68:1.However, Gold retains its status as the superior "safe-haven" due to its lower volatility and dominance as a hedge against systemic risk and currency debasement,” Makda said.
Makda projected spot silver prices to rally up to $91.87 per ounce in the most bullish case. However, on the conservative end, he expects spot silver to rise between $70 - $77 per troy ounce.
“For the potential up move in Silver for 2026, using trend-based Fib. Extension, we can identify the most bullish target at 161 per cent of Fib level placed at $91.87 / ounce. On the conservative side, we may expect upside move towards $70 - $77,” Makda said.
Meena urged investors to prioritise Silver ETFs over physical metal or mining stocks for investing in silver, as they offer high liquidity and low transaction costs.
“Given the current record highs of around $61/oz, the most efficient and cost-effective strategy for a retail investor is to prioritise Silver ETFs over physical metal or mining stocks.
ETFs are the superior choice because they offer high liquidity and low transaction costs, allowing you to bypass the hefty "making charges" and dealer premiums of 15-20 per cent often attached to physical bars,” Meena said.
