Silver prices have crashed 17% after hitting a record high, falling about Rs 31,000 per kg over the past 10 days to Rs 1.47 lakh per kg on Friday, as supply of the metal in the global trading hub of London improved and investors resorted to profit booking. In the international market, spot silver was trading at $48.5 per troy ounce on Friday, down from $54.47 a week earlier. Bullion traders said. large flows of silver from the US and China to Londonhelped drive down prices for the time being.
The London bullion market is the main clearing point for physical silver transactions globally, and availability in the city’s precious metals vaults has a direct bearing on price. A shortage of physical inventories there pushed India’s spot silver to an all-time high of Rs 1.78 lakh/kg on October 14, said experts.
The runaway rise in silver prices this year, before the recent decline, has been backed by strong industrial demand from sectors such as solar energy, electric vehicles, 5G telecom equipment and artificial intelligence (AI) hardware, which makes the metal critical in the global green transition. Meanwhile, stagnant mining and limited recycling have posed supply constraints.
Vikram Dhawan, head of commodity and fund manager at Nippon India Mutual Fund, said that while short-term traders were readjusting exposures, strategic investors — including central banks and long-term exchange-traded fund (ETF) participants — could view the decline in prices as a normalisation phase following months of momentum-driven inflows.
Gold prices, too, have eased in the past week, falling Rs 8,395 per 10 gm, or 6.41%, to Rs 1,22,419 per 10 gm on Friday at the retail end without goods and services tax of 3%. Experts attributed the decline in gold prices to short-term selling and a strong US dollar.
“The broader asset allocation story remains intact, owing to the historical role of gold and silver as effective portfolio diversifiers and long-term stores of value. In such an environment, a disciplined and diversified investment approach is better suited than short-term reactions to volatility,” said Dhawan.
Indian consumers bought both silver and gold coins on October 18- 19 on the occasion of Dhanteras. Many opted for gold and silver ETFs to have exposure to the precious metals, which had witnessed a continuous rally since the beginning of this year.
Experts said the deficit in the global silver supply is likely to continue for some time. While the total silver production stands at 26,000 tonnes, there is a shortage of 6,000- 7,5000 tonnes this year, one of the largest in recent decades. Global demand for silver has been outstripping supply since 2020, according to the Washington-based Silver Institute. Most silver mining happens as a byproduct of gold, lead or zinc mining. Therefore, unless the mining of these metals goes up, supply of silver will remain under constraint.
“The planned summit between the US President Donald Trump and the Russian President was postponed. Uncertainty remains over a possible meeting between Trump and Chinese President Xi Jinping. So, any dips could trigger fresh buying interest due to ongoing global uncertainties,” said Manav Modi, analyst-precious metal research at Motilal Oswal Financial Services. “Prices of precious metals may fall further, giving the chance to consumers to buy them. But fundamentals of both metals remain strong.”
Jateen Trivedi, vice president and research analyst-commodity and currency at LKP Securities, said that in the retail market, investor sentiment remains cautiously positive, with buyers adopting a small denomination approach rather than chasing high prices. “Many are using this dip as an opportunity to re-enter gradually through small allocations, given the broader positive long-term outlook for gold amid global liquidity and central bank buying trends,” he said.
