Silver prices have corrected sharply from their record highs, falling nearly ₹2 lakh or around 45% from the peak of ₹4,39,337, hit in late January this year. This massive fall in the white metal has left investors grappling with a key question — whether to buy the dip or stay on the sidelines. The decline has come despite heightened geopolitical tensions and rising crude oil prices, creating an unusual scenario where safe-haven assets are also under pressure.
Meanwhile, Gold has also seen a similar trend, falling over ₹51,000 from its peak of ₹2,02,984 per 10 grams. While the correction has made prices appear attractive, volatility remains elevated, keeping sentiment divided.
Why are silver prices falling?
The recent decline in silver prices is largely linked to global macroeconomic developments. The failure of U.S.-Iran talks has escalated tensions around the Strait of Hormuz, raising concerns over global energy supply disruptions. At the same time, rising crude oil prices — with Brent near $103 and WTI above $105 — have fuelled inflation fears, complicating the outlook for interest rate cuts.
Higher oil prices have also strengthened expectations of a prolonged high-interest-rate environment, which is typically negative for precious metals. A stronger U.S. dollar has further added pressure, making silver more expensive for global buyers and reducing demand.
Unlike gold, silver’s dual nature as both a precious and industrial metal has amplified its downside, according to experts. Concerns over slowing global growth have weighed on industrial demand for silver, particularly in sectors such as electronics, solar panels, and manufacturing. This has made silver more sensitive to economic cycles, leading to sharper volatility compared to gold, according to Tata Mutual Fund.
Silver has also seen steeper corrections in recent weeks. Global silver prices are down over 8% in a month, and the metal has corrected more than 20% during the recent conflict phase, highlighting the intensity of the sell-off.
MCX silver was closed today, April 14, on account of Ambedkar Jayanti. It ended the previous session ₹2,775 or 1.14% lower at ₹2,40,499 per kg.
What should be investors’ approach?
Tata Mutual Fund noted that silver is facing pressure due to weakening industrial demand and a softer global growth outlook, with easing supply tightness further weighing on prices.
“Silver prices witnessed selling along with decline in industrial metals over demand concerns. The deteriorated global economic outlook may limit the demand for silver over the medium term. The decline in solar installations and large liquidation of the long positions has eased the supply tightness in the global market,” said the brokerage.
Tata Mutual Fund further explained that silver’s hybrid role makes its response to geopolitical tensions more complex, as rising energy costs increase manufacturing expenses and dampen industrial demand, unlike gold, which benefits more directly from safe-haven flows.
“Silver is a developing growth story, and the long-term trend is highly dependent on a broad recovery in industrial demand. One can look for a staggered approach to invest in the medium-term to long-term investment, considering the volatile nature of the commodity,” added the brokerage.
Despite the near-term volatility, Tata Mutual Fund maintained that the structural case for silver remains intact, supported by factors such as high global debt levels, persistent inflation risks, weak confidence in fiat currencies, and expanding industrial demand, particularly from sectors like solar energy, electronics, and green technologies.
“Despite recent price swings, the fundamental case for owning silver remains intact. Its dual role as both a monetary metal and an industrial commodity continues to underpin long-term demand,” Tata Mutual Fund said.
Overall, while the sharp correction has made silver prices more attractive, the outlook remains tied to global growth trends and industrial demand recovery. For investors, the current phase calls for a cautious and staggered approach rather than aggressive buying, as volatility is likely to persist in the near term.
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 making any investment decisions.
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