The spectacular rally in silver prices, which saw the white metal surge by a blistering 170% in 2025, is not over yet. According to a new analysis by domestic brokerage firm Motilal Oswal, silver still possesses significant momentum and is poised to extend its record-breaking run into 2026, potentially outperforming gold once again.
From Target-Smashing Rally to New Peaks
Motilal Oswal's report revisits a year of extraordinary gains. At the start of 2025, the brokerage had set year-end targets of ₹84,000 for gold and ₹1,10,000 for silver. These estimates were shattered far ahead of schedule. Gold hit its ₹84,000 target in Q1 and later soared to an all-time high of ₹1,40,465.
Silver's performance was even more dramatic. It achieved its ₹88,000 target in the second quarter and then skyrocketed to a historic peak of ₹2,54,000 per kilogram on the MCX—more than doubling the initial forecast. This rally positioned silver as the top performer among precious metals and across major asset classes last year.
The Four Pillars of Silver's Strength
The brokerage identifies a powerful confluence of factors that fueled the 2025 surge, with four key drivers standing out for the white metal's exceptional performance.
1. Unmatched Industrial and Safe-Haven Demand
Silver's unique dual identity as both a precious and an industrial metal gave it a decisive edge. Motilal Oswal notes that industrial demand for silver reached its second-highest level on record in 2025. This was propelled by the global energy transition, including rapid solar photovoltaic installations, widespread electrification, electric vehicle adoption, and heavy investment in grid infrastructure.
This booming industrial consumption, coupled with persistent safe-haven demand amid geopolitical tensions and global uncertainty, created a perfect storm. The market has now been in a structural deficit for five consecutive years, with demand consistently outstripping supply.
2. Intensifying Physical Market Tightness
The supply-demand imbalance became so acute that it led to periods of backwardation in silver prices—a rare condition where spot prices trade higher than futures prices, signaling immediate scarcity. This underscored severe physical tightness.
While COMEX inventories saw intermittent rises due to tariff arbitrage, this masked the underlying strain. In contrast, silver inventories on the Shanghai Futures Exchange (SHFE) fell by 30-40% from their peaks, and London Metal Exchange (LME) stocks also trended lower throughout the year. Strong physical offtake from Eastern markets continued to drain metal from global supply chains.
3. Constrained Mine Supply
On the supply side, growth remained muted. Structural issues like chronic underinvestment, declining ore grades, and silver's heavy reliance on by-product production from base metals like zinc and copper limited the market's ability to respond to soaring demand. These constraints continue to tighten the long-term supply outlook.
4. Resurgent Investor Inflows
After a prolonged phase of outflows, investor sentiment turned decisively positive. ETF flows for silver turned positive in the second half of 2025, adding significant momentum to prices. Domestically, assets under management for gold and silver ETFs have skyrocketed by over 150% since the start of 2025, highlighting robust and sustained investor interest.
The 2026 Outlook: Policy Uncertainty to Fuel Further Gains
Looking ahead, Motilal Oswal forecasts another strong year for silver, expecting it to continue outperforming gold. The brokerage believes the metal's strength will be front-loaded in the first half of 2026, driven by policy uncertainty and currency volatility.
For 2026, Motilal Oswal has set a target of ₹3,20,000 per kilogram for MCX silver, with a risk-negation level placed at ₹1,40,000. This implies a potential upside of approximately 27% from current levels around ₹2.52 lakh. In the international market, the brokerage expects COMEX silver to reach $30 per ounce.
The trajectory for the second half of 2026 will hinge on global growth cues, bond market stability, and the credibility of monetary policy moves worldwide. Given this outlook, the brokerage maintains a "Buy on Dips" strategy for silver throughout the year.
