Silver shines despite small dip: Festival buying, global flows fuel demand

Silver prices in India declined to around ₹161 per gram on Thursday (November 20) after briefly rebounding to ₹165/g earlier in the week, as festival-season buying and global inflows supported the white metal.

Over the past year, domestic silver prices have surged nearly 75 per cent, outpacing gold and turning silver into one of the best-performing assets for Indian investors.

According to bullion traders, the volatility in prices is largely due to the trend for buyers to wait for a dip in the market, for prices to soften before they rush in and send spot rates quickly back up. Heavy stocking by jewellers and small manufacturers ahead of the wedding season has also added to the momentum. (Current spot rate of silver is: ₹161/g as of November 21, 2025)

ETF at steep premiums

Tejas Shigrekar, chief technical research analyst commodities and currencies, Angel One, said that silver has been “surging past the significant $50 per ounce level for the first time in over a decade”, adding that price action over the last several weeks shows that “volume spikes align with price surges”.

On the Multi Commodity Exchange (MCX), the rebound in domestic prices roughly tracks international moves, where silver has been trading in a broad $48–53 per ounce band. But domestic physical supply tightness is amplifying the move.

Also read: Gold, silver regain sheen on Diwali as safe-haven demand, value buying rise

“There is a shortage of physical silver in the domestic market and silver exchange traded funds are trading at unusually high premiums,” Angel One’s Shigrekar wrote. He added that, “recently, we found the silver ETFs are trading at 12-18 per cent, above their import parity price.”

Global flows add value

The domestic rally is being reinforced by powerful global flows, according to Sunil Jain, analyst, Elara Capital. He says the commodity sector funds worldwide have been on a “winning streak for consecutive weeks”.

He wrote that since July 2025, global investors have poured $16.8 billion into commodity funds, showing how much money is shifting into metals and raw materials as people look for protection against inflation and look beyond expensive stock markets.

Indian investors pay more

Steep premiums in domestic markets mean investors are paying far more than international prices — whether they buy physical silver or ETFs. Shigrekar also cautioned that recent volatility increases the cost of leveraged positions, where traders borrow money or use margin to amplify their bets and therefore face higher risk.

Even so, sentiment remains upbeat. In his medium-term outlook, Shigrekar said silver could soon test the next resistance band — the price zone where rallies typically slow because many traders take profits — at “1,71,000 - 1,72,700 ($57.40 - $59)” per kg. If silver breaks above and stays there, he expects it could climb to “aggressive levels…1,86,000- 1,93,000 ($66.30- $70).”

Pivot to precious metals

Precious metals have received the largest share of this wave. Elara Capital’s Jain highlighted that “precious metal funds continued their extraordinary run, recording $11 billion of inflows this week—nearly double last week’s $6 billion. Over the past two months, these funds have absorbed a record $80 bn, marking the strongest stretch of inflows”.

Jain also pointed out that while India-focused equity funds have seen two straight months of net redemptions, global investors are rotating into China, gold, silver and broader commodity baskets. That shift, he said, reflects a clear macro narrative: investors are hedging against geopolitical instability and rising global yields by adding commodities with both industrial and monetary value.

Also read: Investors turn to silver bars as gold becomes costly

Motilal Oswal Financial Services says the silver’s rally is part of a deeper structural revaluation of the metal.

“The primary driver is silver's dual identity as both a critical industrial commodity, accounting for 59 per cent of total usage, and a safe-haven asset sought during geopolitical instability,” Motilal Oswal wrote in its report "Silver 2030 – The Unprecedented Rise".

The report emphasises that global silver supply has failed to keep pace with consumption for seven consecutive years, creating a multi-year deficit. Industrial silver use hit 680.5 million ounces last year and is projected to exceed 700 million ounces in 2025, driven primarily by solar manufacturing, electric vehicles, 5G expansion and electronics.

Motilal Oswal noted that silver typically swings about 1.7 times more sharply than gold; so when prices rise or fall, silver tends to move much faster. Even with that volatility, the firm says long-term drivers like renewable energy, electronics and industrial demand make the bigger trend positive despite short-term ups and downs.

ETF boom and rupee effect

For Indian investors, Motilal Oswal says silver’s returns could grow even faster because of currency trends.

The firm noted that silver ETFs in India have been “notable outperformers in 2025, surging by approximately 69 per cent year-to-date”, and that monthly ETF inflows in August jumped “180 per cent” compared to last year’s average.

The report also says that when global silver prices rise at the same time the rupee weakens, it creates “powerful leverage” for Indian investors. In simple terms, international price gains plus a weaker rupee make domestic silver even more profitable. That is why the firm says silver acts as a “portfolio stabilizer in an environment of currency weakness”.

India's import taxes

India’s high import duties and GST also keep domestic silver prices elevated. So whenever global prices rise, the impact is felt more sharply in India — especially during festival months when physical silver often trades at large premiums.

Also read: Are silver ETFs the next big thing for Indian investors?

Analysts across brokerages say investors should be careful about chasing the recent spike, particularly because ETFs are trading at double-digit premiums. Elara Capital’s Jain has warned that if global market sentiment weakens or if US bond yields rise, these large inflows could quickly reverse and trigger profit-taking.

Even so, the longer-term story remains positive. Motilal Oswal said, “ The investment case for silver through 2027 is on the endurance of a multi-year structural supply deficit, driven by inelastic mining output and accelerating demand from the green economy.”

In other words, silver demand is rising steadily while supply isn’t growing fast enough; a gap that typically supports higher prices over time.