On key futures platform MCX, prices touched an all-time high of Rs 84,515/kg last week, gaining around 12% in the last two weeks. A similar development was observed on foreign platforms, but the metal was trading down more than 40% from its all-time high of $49.51 per ounce tested in April 2011.
The rapid rise in prices is mainly due to its unique industrial properties, which distinguish it from gold. Prices of key industrial metals like copper, aluminum, zinc and lead have risen sharply since April due to concerns over supply constraints. This prompted speculators to bet heavily on silver.
The ongoing bull rally in gold has also had a positive influence on silver prices. Historically, silver and gold, both considered precious metals, are often influenced by similar market conditions. Because of this similarity, the two can exhibit similar price movements, with silver prices often following gold price trends.
In recent years, the price development of silver has been different from that of gold. Even though silver is influenced by both investment and industrial demand, its industrial uses can create additional volatility in its price compared to gold, which is primarily driven by investment and jewelry demand. .
Additionally, expectations of lower U.S. rates, which could boost borrowing and spending by consumers and businesses, could boost industrial growth. Stronger industrial growth generally translates into higher demand for silver, which can drive up prices. Higher interest rates and issues such as the war between Israel and Hamas and the protracted conflict between Russia and Ukraine are negatively affecting global growth prospects. Economic decline generally increases the demand for silver, which is sometimes seen as a hedge against inflation. Ongoing momentum-driven buying is expected to expand in the immediate future, driven by a strong rally in gold. Expectations of interest rate cuts, escalating geopolitical tensions and lingering inflation concerns could help prices remain firm. However, it is less unlikely to record new highs in its main international market.
China is playing an increasingly important role in the global silver market. The country is a major player in various industries, including electronics, solar energy, and manufacturing, in which silver is widely used. Therefore, the growth in these sectors contributes to the demand for this product in China.
However, the recent series of pessimistic economic publications and the constant increase in debt have highlighted the increasing pressure on their economy and therefore on the demand for raw materials in the long term.
(The author, Hareesh V, is Head of Commodities at Geojit Financial Services. Opinions are his own)
On key futures platform MCX, prices touched an all-time high of Rs 84,515/kg last week, gaining around 12% in the last two weeks. A similar development was observed on foreign platforms, but the metal was trading down more than 40% from its all-time high of $49.51 per ounce tested in April 2011.
The rapid rise in prices is mainly due to its unique industrial properties, which distinguish it from gold. Prices of key industrial metals like copper, aluminum, zinc and lead have risen sharply since April due to concerns over supply constraints. This prompted speculators to bet heavily on silver.
The ongoing bull rally in gold has also had a positive influence on silver prices. Historically, silver and gold, both considered precious metals, are often influenced by similar market conditions. Because of this similarity, the two can exhibit similar price movements, with silver prices often following gold price trends.
In recent years, the price development of silver has been different from that of gold. Even though silver is influenced by both investment and industrial demand, its industrial uses can create additional volatility in its price compared to gold, which is primarily driven by investment and jewelry demand. .
Additionally, expectations of lower U.S. rates, which could boost borrowing and spending by consumers and businesses, could boost industrial growth. Stronger industrial growth generally translates into higher demand for silver, which can drive up prices. Higher interest rates and issues such as the war between Israel and Hamas and the protracted conflict between Russia and Ukraine are negatively affecting global growth prospects. Economic decline generally increases the demand for silver, which is sometimes seen as a hedge against inflation. Ongoing momentum-driven buying is expected to expand in the immediate future, driven by a strong rally in gold. Expectations of interest rate cuts, escalating geopolitical tensions and lingering inflation concerns could help prices remain firm. However, it is less unlikely to record new highs in its main international market.
China is playing an increasingly important role in the global silver market. The country is a major player in various industries, including electronics, solar energy, and manufacturing, in which silver is widely used. Therefore, the growth in these sectors contributes to the demand for this product in China.
However, the recent series of pessimistic economic publications and the constant increase in debt have highlighted the increasing pressure on their economy and therefore on the demand for raw materials in the long term.
(The author, Hareesh V, is Head of Commodities at Geojit Financial Services. Opinions are his own)