Silver prices in India staged a strong recovery on Tuesday, climbing over 4% after witnessing their most severe single-day drop in over five years during the previous trading session. This rebound mirrored a stabilization in global markets, where the metal steadied after a steep 9% plunge as traders locked in profits following a powerful year-end surge.
Indian and Global Market Movements
On the Multi Commodity Exchange (MCX), silver futures advanced by more than 4% to reach ₹2.36 lakh per kilogram. This recovery came on the heels of a wildly volatile session on Monday. During that session, contracts for March delivery had skyrocketed past the ₹2.5 lakh mark for the first time ever, hitting a peak of ₹2,54,174. However, the rally reversed dramatically, with prices crashing by ₹28,674 per kg—a drop of 10.3%—to touch an intraday low of ₹2,25,500.
Globally, the spot silver price traded near $73 an ounce on Tuesday after its sharp tumble. Gold prices held largely steady after their biggest decline in two months. The pullback across precious metals was attributed to technical indicators flashing overbought signals after a rapid price ascent, with thin market liquidity exacerbating the price swings. Platinum and palladium also continued to slide after posting double-digit losses.
By 9:12 am Singapore time, spot silver had risen approximately 1% to $73.06 an ounce. This level followed a record high of $84.01 reached recently. In contrast, gold was trading near $4,343.13.
The Structural Drivers Behind Silver's 2025 Surge
According to a detailed report from Motilal Oswal Financial Services Ltd. (MOSL), silver's remarkable performance in 2025 is not a result of short-term speculation but is driven by profound structural changes in the global market. The rally has been supported by central bank purchases, inflows into Exchange-Traded Funds (ETFs), and three interest rate cuts by the US Federal Reserve.
The core issue is a prolonged physical supply deficit. The MOSL report highlights that 2025 marks the fifth consecutive year where global silver supply has failed to meet the combined demand from industrial users and investors. Navneet Damani, Head of Research – Commodities at MOSL, explained the shift, stating, "The silver market in 2025 has moved beyond a conventional bull cycle and entered a structural phase, driven by prolonged physical supply deficits, inventory depletion, and policy-led supply constraints."
A critical factor intensifying the deficit is China's evolving position. As a major refiner and net importer, China has seen its physical silver inventories steadily decline throughout 2025, reaching their lowest levels in a decade. Adding further pressure, new export licensing requirements set to take effect on January 1, 2026, are expected to tighten China's control over silver exports. This policy move could restrict the availability of physical metal in global markets at a time when other major inventory hubs are already under strain.
Future Outlook and Investment Strategy
MOSL analysts emphasize that the rally is rooted in genuine metal scarcity, reinforced by robust industrial demand from sectors like electronics and renewable energy, alongside its appeal as a strategic hedge for investors. Analysts Navneet Damani and Manav Modi noted, "Silver’s 2025 rally is being shaped by real metal scarcity rather than speculative positioning... signalling a durable shift in how the silver market is priced and traded."
From an investment perspective, MOSL advocates a "buy-on-dips" approach with a staggered investment strategy. The brokerage firm had previously set a target of $75 per ounce on the COMEX, which has already been achieved. They have now reiterated their next target of $77 on COMEX, which translates to approximately ₹2,46,000 in the Indian domestic market. The report concludes that any future revisions to this outlook will depend on the evolution of supply dynamics, inventory trends, and policy developments.
Disclaimer: The views and recommendations mentioned are those of individual analysts or broking companies. Investors are advised to consult certified experts before making any investment decisions.
