Silver Prices Soar to Record Highs in India and Globally

Silver prices in India reached unprecedented levels on October 14, 2023, with the metal trading at ₹189 per gram and ₹1.89 lakh per kilogram in Delhi. This surge mirrors a similar trend in global markets where silver touched $53.45 per ounce on the COMEX exchange. The spike is attributed to a tightening supply of the metal, geopolitical tensions, and expectations of future interest rate cuts by the US Federal Reserve.

Year-to-date, silver has demonstrated significant gains, reflecting its dual role as a safe-haven asset and its industrial demand. Unlike gold, silver is more cyclical, responding sharply to fluctuations in global economic trends. This characteristic can lead to higher potential returns, but also brings increased volatility. Manav Modi, an analyst specializing in precious metals at Motilal Oswal Financial Services, highlighted that the recent slowdown in inflows into silver exchange-traded funds (ETFs) indicates supply pressures in the market.

“Prices may continue to outperform in the near term, but investors should be prepared for fluctuations,” Modi stated.

Geopolitical factors have also fueled the recent rally in silver prices. Renewed trade tensions between the US and China, marked by China’s expanded controls on rare-earth exports and the US’s threats of tariffs, have heightened uncertainty across global markets. Additionally, the ongoing US federal government shutdown, now in its 13th day, has contributed to market volatility.

Expectations regarding monetary policy play a significant role in shaping investor sentiment. Anna Paulson, President of the Philadelphia Federal Reserve, noted that rising risks in the labor market bolster the argument for further interest rate cuts in the US. Traders are now keenly awaiting insights from Federal Reserve Chair Jerome Powell during his address at the National Association for Business Economics (NABE) annual meeting. Typically, lower interest rates bolster non-yielding assets like silver and gold, enhancing their attractiveness to investors.

In India, silver remains a favored investment choice, particularly in Delhi, where both retail and institutional demand continue to rise. Aksha Kamboj, Vice President of the India Bullion & Jewellers Association (IBJA), explained, “Silver’s appeal is twofold: it acts as a hedge against economic uncertainty and offers industrial exposure.” Kamboj advised investors to adopt a disciplined, systematic approach to leverage potential price movements while effectively managing risk.

Swapnil Aggarwal, Director at VSRK Capital, recommended that new investors consider a gradual entry into the market through smaller, staggered purchases. For existing investors, holding onto their positions may be beneficial to capitalize on the ongoing market momentum.

As global economic conditions evolve and geopolitical tensions persist, the silver market is likely to remain dynamic. Investors are encouraged to stay informed and adjust their strategies accordingly to navigate the complexities of this precious metal’s market.