Silver prices could surpass ₹1 lakh per kg: What's causing the rise?

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Silver prices could surpass ₹1 lakh per kg: What's causing the rise?

Team FS

15/Apr/2024

Key Points:

Steady Rise in Silver Prices: Silver prices in India have witnessed a consistent increase in 2024, reaching a record high of ₹86,300 per kg. Predictions from Motilal Oswal suggest further gains, with projections of ₹1 lakh to ₹1.2 lakh per kg in the medium to long term.
Global Optimism: The bullish sentiment extends globally, with silver prices hitting a three-year high in international markets. Factors contributing to this surge include increased demand for safe-haven assets amidst geopolitical tensions and hopes of US interest rate cuts, as well as speculative buying and a rally in industrial metals.
Unique Properties and Correlation with Gold: Silver's industrial properties, coupled with its historical correlation with gold, contribute to its attractiveness as an investment asset. Unlike gold, silver's dual role as an investment and industrial commodity can lead to additional volatility, especially during periods of economic uncertainty.

Silver prices in India have been on an upward trajectory throughout 2024, marking a significant milestone with a recent record of ₹86,300 per kg. This surge in silver prices follows a notable 7.19% gain in 2023 and is fueled by optimistic projections from brokerage firm Motilal Oswal, forecasting prices to reach ₹1 lakh to ₹1.2 lakh per kg in the medium to long term.

Global Trends and Market Dynamics
The bullish sentiment surrounding silver is not confined to domestic markets, as international prices also hit a three-year high. Several factors contribute to this upward trend, including heightened demand for safe-haven assets amidst escalating geopolitical tensions and expectations of US interest rate cuts. Additionally, speculative buying and a rally in industrial metals further amplify the surge in silver prices.

Silver's Unique Appeal and Relationship with Gold
What sets silver apart from other precious metals is its dual role as both an investment asset and an industrial commodity. Unlike gold, silver boasts unique industrial properties, making it particularly attractive amid rising prices of key industrial metals like copper, aluminium, zinc, and lead due to supply constraints. Furthermore, silver historically exhibits a positive correlation with gold, benefiting from the ongoing bullish trend in the yellow metal.

Navigating Volatility and Uncertainty
While silver's industrial applications contribute to its appeal, they also introduce additional volatility, especially during periods of economic uncertainty. Experts caution that silver prices may experience fluctuations driven by factors such as investment and jewellery demand, geopolitical events, and macroeconomic indicators. As investors navigate these uncertainties, understanding the dynamics shaping silver prices becomes crucial in making informed investment decisions.

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Silver prices could surpass ₹1 lakh per kg: What's causing the rise?

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