The brokerage firm believes silver may be entering the early stages of a multi-year commodity supercycle.
Silver’s performance in 2025 was unprecedented in recent memory. As per Motilal Oswal, prices surged from Rs 90,000 in April to Rs 2.5 lakh by the end of December—a move that unfolded at a pace rarely seen in the commodity space.
The report notes that the silver market gained momentum in stages, with rallies accelerating in shorter intervals as the year progressed.
This rally was driven by a combination of acute physical tightness, rising industrial usage, falling exchange inventories, and safe-haven demand triggered by geopolitical and monetary uncertainties.
The supercycle framework: Why silver may not be done yet
Motilal Oswal’s report positions silver’s 2025 rally not just as a standalone event, but potentially as part of a broader commodity supercycle. This structural setup, the brokerage notes, is being underpinned by four major trends:
1. Industrial Demand and the Energy Transition
Silver’s dual nature as both a precious metal and an industrial input has become more pronounced. According to Motilal, industrial demand reached new highs in 2025, led by applications in:
- Solar photovoltaic installations
- Electric vehicles
- Grid infrastructure and electrification projects
This demand, Motilal Oswal says, is expected to remain robust as nations ramp up clean energy adoption. Motilal Oswal suggests silver’s expanding role in clean energy applications could help reinforce long-term price support.
2. Persistent Supply Constraints
On the supply side, the brokerage points to chronic underinvestment in mining, declining ore grades, and silver’s dependence on by-product extraction from base metals. Inventories at major exchanges also trended lower throughout the year. Shanghai Futures Exchange silver inventory reportedly dropped by 30–40% from peak levels, while LME stocks remained under pressure.
Motilal Oswal notes rare backwardation events in silver futures during 2025, reflecting acute short-term supply tightness.
3. ETF Flows and Investor Interest
Investor participation returned strongly in 2025. According to the report, domestic Gold and Silver ETF AUM jumped over 150% during the year. Motilal interprets this as a sign of renewed investor interest after a prolonged lull. ETF flows, which had been largely negative in previous years, turned decisively positive in the second half of 2025.
4. Currency and Macro Tailwinds
Motilal Oswal observes that persistent weakness in the US dollar index, coupled with rupee depreciation, provided a dual tailwind for Indian investors. In addition, geopolitical tensions, shifting central bank policies, and a cautious Fed outlook continued to support silver’s appeal as a portfolio hedge.
Silver outlook for 2026: Early strength, volatility later
Looking ahead, Motilal Oswal maintains a positive view on silver, but also flags potential choppiness in the second half of the year.
The firm expects silver’s strength to remain front-loaded into H1 2026, citing continued policy and currency uncertainty. However, volatility may rise in H2 due to evolving macro conditions, profit booking after the sharp 2025 rally, and global rate actions.
“Despite potential near-term corrections, strong structural demand and overall uncertainties limit downside, reinforcing gold and silver as core portfolio hedges in a fragmented global macro landscape,” the report states.
Price Targets and Strategy
Looking ahead, Motilal Oswal believes silver could outperform gold in 2026. The brokerage cites an improved economic outlook, greater industrial demand, and expectations of interest rate cuts as key tailwinds that could drive further upside. In the international markets, the brokerage sees silver prices reaching $30/oz on COMEX.
The brokerage has set a 2026 target of Rs 3,20,000 for MCX Silver, while placing the risk negation level at Rs 1,40,000. This represents a potential 28% upside from current levels, assuming prices near the Rs 2.5 lakh mark.
The brokerage continues to maintain a Buy on Dips stance for silver in 2026.
Conclusion
While 2025 was a breakout year for silver, Motilal Oswal suggests the underlying macro, industrial, and supply-demand dynamics remain intact going into 2026. As silver’s identity as both a precious and industrial metal becomes more relevant, the brokerage sees a supportive case for a continued uptrend, though with higher volatility as the year progresses.
Also read: Nifty to reach 29,500 by 2026-end, BNP Paribas says, backing HDFC Bank, Maruti Suzuki among top bets
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
