Gold and silver prices have surged to unprecedented levels, driven by a broader rally in commodity markets. Precious metals, particularly gold and silver, have witnessed strong buying momentum. On the Multi Commodity Exchange (MCX), gold has hit an all-time high, trading around ₹76,000 per 10 grams, while silver is hovering near ₹92,000 per kg. With investors flocking to safe-haven assets, many are asking: will silver soon breach the ₹1,00,000 mark?
Current Market Overview
Market analysts are optimistic about the future of silver prices, anticipating a move toward this significant psychological milestone. On the MCX, gold prices remained stable at ₹75,295 per 10 grams, while silver saw a 0.56% increase to ₹92,556 per kg. In international markets, spot gold rose by 0.2% to $2,661.25 per ounce, following a record high of $2,670.43 earlier in the week. Meanwhile, spot silver remained steady at $31.85 per ounce.
According to Jigar Trivedi, Senior Research Analyst for Currencies and Commodities at Reliance Securities, “Comex silver prices have appreciated by more than 34% year-to-date (YTD), outpacing Comex gold, which has gained by 29%.” This growth is attributed to factors such as a weak US dollar, rising geopolitical risks, and increasing industrial and jewelry demand for silver. In the domestic market, MCX silver prices have risen over 24% YTD, surpassing the 20% increase in gold prices.
Bullish Predictions
Trivedi further stated, “MCX Silver December is hovering around ₹92,000 per kg, and we don’t deny the possibility of it hitting a six-digit figure by the end of 2024. Comex silver is projected to reach $33 – $35 per ounce within the next four to six months, indicating a bullish outlook.”
Key Factors Supporting Silver Prices
Several factors could support silver prices as they move towards the ₹1,00,000 mark.
Interest Rate Cuts
The US Federal Reserve recently implemented a larger-than-expected interest rate cut of 50 basis points (bps) during its September meeting. Members of the Federal Open Market Committee (FOMC) have indicated that the deterioration of the labor market and softening inflation could warrant further rate cuts. These expectations have helped push silver prices above $31 per ounce in international markets, which is likely to influence domestic silver prices as well.
China’s Stimulus Measures
China, a major consumer of commodities, has announced its most aggressive stimulus measures since the COVID-19 pandemic to revive its economy. These initiatives are expected to bolster demand for industrial commodities, including silver. The People’s Bank of China’s monetary stimulus package aims to support investment in silver-intensive green technologies, particularly solar panel production.
The Growth of Electric Vehicles and Green Energy
The expanding electric vehicle (EV) market is another factor driving silver demand. Projections indicate that the EV market will grow at a compound annual growth rate (CAGR) of 21.7% from 2023 to 2030. Each electric vehicle requires 15-30 grams of silver. Furthermore, demand for silver is increasing in green energy technologies such as solar panels and wind turbines. The International Energy Agency (IEA) forecasts that global renewable capacity will increase by 50% by 2030, further enhancing silver’s industrial demand.
Rising Jewelry Demand Amid Declining Production
Jewelry and silverware are expected to account for 20-30% of total silver demand in 2023, with a projected year-on-year increase of 5-10% in 2024. This growth is anticipated as discretionary spending rises among consumers. Conversely, global silver mine production is forecasted to decline by 0.8% to 823.5 million ounces in 2024, exacerbated by mine closures in Peru and environmental regulations slowing new projects in Mexico. This situation could lead to supply constraints for silver.
The Gold-Silver Ratio
The current Gold-Silver ratio stands at 84, often rising during periods of economic uncertainty or expansionary policies such as interest rate cuts. While this ratio may remain above 80 in the short term, it could narrow to 70 or 60 within the next 12-14 months if industrial demand for silver increases and interest rates fall. A declining Gold-Silver ratio typically signals that silver prices are rising relative to gold prices, indicating an expectation for silver to outperform gold.
Technical Analysis
From a technical standpoint, silver is displaying a positive trend on the hourly timeframe. Prices are trading above the 50-day moving average, suggesting bullish momentum. Ajay Kedia, Director of Kedia Advisory, noted, “Traders may find opportunities to go long, especially on pullbacks near support levels. The current positioning above the 50 MA reflects strong buying interest and the likelihood of continued upward movement, barring any sudden reversals.”
Conclusion
As gold and silver prices reach new heights, the outlook for silver remains optimistic. Multiple factors, including interest rate cuts, China’s stimulus measures, and rising industrial demand, support the potential for silver prices to climb toward the ₹1,00,000 mark. While the market remains volatile, the combination of technical indicators and economic conditions suggests that investors should keep a close eye on the developments surrounding silver in the coming months. With the growing importance of silver in various sectors, the white metal could soon make its mark as a sought-after asset.
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