Silver prices likely to move to ₹1.2 lakh this Diwali, forecast experts

Silver prices surpassed the ₹1 lakh mark in the physical market this week, while in global markets, Comex silver prices hovered above $34.50 per ounce, reaching their highest levels in 12 years. Analysts predict that the rally in domestic silver prices will likely continue, with expectations of the white metal crossing the ₹1.10-1.20 lakh range as Diwali approaches.

Silver prices have been on a significant upward trajectory in recent sessions, fueled by various global factors such as rising tensions in the Middle East, interest rate cuts by the European Central Bank (ECB), and uncertainty surrounding the upcoming US election. These developments have spurred increased demand for safe-haven assets, including silver.

So far, Comex silver has surged 11% this month, marking its largest monthly gain since May 2024. Year-to-date, silver prices have jumped by 46%, outpacing gold, which has seen a 33.3% rise since the end of 2023.

In India, the demand for silver is primarily driven by its use in jewellery, particularly during festivals like Diwali and Akshay Tritiya. However, globally, silver consumption is more heavily influenced by the industrial sector, where demand is significantly higher.

Industry Experts Weigh In

The recent surge in silver prices has caught the attention of investors and analysts alike. As silver prices cross the ₹1 lakh mark in India and remain elevated globally, industry experts weigh in on the reasons behind this surge and the potential for further price increases. Here's what they said:

Vishnu Kant Upadhyay, AVP - Research and Advisory at Master Capital Services, highlights that silver is extensively used in electronics, solar panels, batteries, and semiconductors, making it a crucial component of modern technology. The growing industrial demand for silver, coupled with expectations of further interest rate cuts by the Federal Reserve has boosted the metal's market value. As gold prices rise, retail buyers increasingly turn to silver as a more affordable alternative. Additionally, ongoing geopolitical tensions and economic uncertainty are driving investors toward precious metals, which are viewed as safe-haven assets.

Upadhyay notes that silver prices have surged past the psychological ₹1 lakh mark, in line with global trends where Comex silver is trading at its highest level since October 2012. He adds that recent technical indicators, such as the breakout above the neckline resistance of an inverse head and shoulder pattern, along with increased trading volumes, signal further upward momentum. Prices are expected to climb higher, potentially reaching ₹1.10 lakh and ₹1.20 lakh in the near term.

Jateen Trivedi, VP - Research Analyst at LKP, also predicts that prices could hit ₹1.10 lakh before Diwali as retail investors view silver as a more affordable option compared to gold, which is trading at ₹78,000 per 10 grams. Globally, silver's value is supported by demand from the electric vehicle (EV) industry and the growing use of photovoltaic technologies in renewable energy. This, combined with macroeconomic uncertainty and geopolitical tensions, has reinforced silver's bullish trend.

According to Trivedi, silver currently faces resistance around ₹1 lakh to ₹1.01 lakh, with support in the ₹96,000 to ₹96,500 range. The strong demand for precious metals during the festive season is expected to sustain silver's performance, making it a compelling investment.

Narinder Wadhwa, Managing Director of SKI Capital, attributes the surge in silver prices to a combination of factors. Domestically, India is in the midst of its festival and wedding season, which traditionally drives up demand for precious metals like gold and silver. The geopolitical climate, particularly the ongoing conflict in Israel, has also contributed to the rise in bullion prices, as investors seek safe-haven assets in times of uncertainty. Additionally, the looming US election has introduced volatility into the markets, prompting investors to hedge their portfolios with precious metals.

Wadhwa believes that the confluence of seasonal demand in India, geopolitical risks, and political uncertainty in the US has created the perfect storm for silver prices to reach unprecedented levels. Bullion continues to be seen as a refuge in these turbulent times, and this trend may persist if the current conditions continue.

In summary, as silver continues its upward momentum, driven by industrial demand, geopolitical uncertainties, and the seasonal spike in precious metal purchases, analysts believe there is room for further gains. With expectations of reaching ₹1.10 lakh to ₹1.20 lakh in the near term, silver remains an attractive option for investors seeking a hedge against market instability.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.