After a blistering 170% rally in MCX silver prices last year—positioning the white metal as the top performer among precious metals and outperforming all major asset classes—domestic brokerage firm Motilal Oswal believes silver still has momentum left to extend its record-breaking run in 2026.

In its latest report, the brokerage noted that a confluence of factors, including geopolitical escalations, global trade tensions, monetary easing, ETF inflows, supply constraints, rising safe-haven demand, and a fall in exchange inventories, were the key drivers behind the massive rally in both gold and silver prices last year.

At the start of 2025, the brokerage had expected gold to reach ₹84,000 by year-end and silver to hit ₹1,10,000. However, these estimates were achieved much earlier than anticipated. Gold met its ₹84,000 target in the first quarter and subsequently surged to an all-time high of ₹1,40,465.

Silver reached its ₹88,000 target in the second quarter and later climbed to a record high of ₹2,54,000, more than doubling the brokerage’s original target. In its report, the brokerage highlighted the following four key factors behind the rally.

Strong industrial demand

Motilal Oswal said silver significantly outperformed gold, supported by its dual role as both a precious and an industrial metal. The brokerage noted that accelerating energy transition trends, alongside persistent safe-haven demand amid global uncertainty, helped silver emerge as a key beneficiary during the rally.

Building on this, Motilal Oswal highlighted that industrial demand for silver touched its second-highest level on record in 2025. The brokerage attributed this strength to rising solar photovoltaic installations, electrification, electric vehicle adoption, and increased investments in grid infrastructure, causing the silver market to remain in a structural deficit for the fifth consecutive year, with demand consistently outpacing supply.

Physical tightness intensifies

Motilal Oswal further said that the supply-demand imbalance led to periods of rare backwardation in silver prices, signalling acute physical tightness during the year. This underscored the growing strain in the physical market despite price rallies.

The brokerage noted that while COMEX silver inventories rose intermittently during 2025—largely due to tariff-related arbitrage and delivery incentives—these increases masked the underlying physical tightness.

In contrast, silver inventories on the Shanghai Futures Exchange declined by nearly 30–40% from peak levels, while LME inventories also trended lower through the year.

Motilal Oswal added that strong physical demand from eastern markets continued to draw silver from global supply chains, reinforcing the divergence between visible exchange stocks and actual real-world availability.

Mining disruptions

According to Motilal Oswal, mine supply growth remained muted due to chronic underinvestment, declining ore grades, and silver’s heavy dependence on by-product production from base metals. These structural constraints limited the market’s ability to respond quickly to rising demand, thereby tightening the supply outlook further.

Robust ETF inflows

Motilal Oswal also pointed to a sharp turnaround in investor interest, noting that ETF flows turned decisively positive in the second half of the year after a prolonged phase of outflows. This renewed participation provided additional momentum to silver prices.

The brokerage highlighted that domestic gold and silver ETF assets under management have jumped by more than 150% since the start of 2025, signalling strong and sustained inflows from investors seeking exposure to precious metals.

Silver prices target 2026: Policy uncertainty to drive silver’s early-2026 strength

For the current year, Motilal Oswal has forecast a similar rally in silver prices and expects the metal to outperform gold. The brokerage said silver’s strength is likely to be front-loaded in the first half of 2026 amid policy uncertainty and currency volatility.

However, whether the second half sees consolidation or a continuation of the rally will depend on global growth cues, bond market stability, and the credibility of monetary policy.

Motilal Oswal has set a 2026 target of ₹3,20,000 per kilogram for MCX silver, while placing the risk-negation level at ₹1,40,000. This implies a potential upside of about 27% from current levels, considering the current price of ₹2.52 lakh

In the international market, the brokerage expects silver prices on COMEX to reach $30 per ounce.

The brokerage continues to maintain a “Buy on Dips” stance on silver for 2026.

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.