Silver Soars ₹10,000 in a Single Day on Supply Crunch, Rate-Cut Optimism and Weak Dollar

Silver prices recorded an extraordinary jump of ₹10,000 on Monday, hitting ₹1.74 lakh per kg. The metal has now doubled in value over the past year, far outperforming gold, which gained around 60% in the same period.

This rapid rise is being driven by a sustained global supply deficit, strong investment interest, and supportive macroeconomic conditions—including a weaker US Dollar and growing expectations of interest rate cuts by the US Federal Reserve. Analysts believe the shortage will persist, leaving ample room for silver prices to climb further into 2026.

The rally to ₹1.74 lakh per kg—up from ₹1.64 lakh—was propelled by four key factors:

1. Global Supply Shortage:
The biggest catalyst is the widening supply deficit. Annual silver production is about 26,000 tonnes, while this year’s shortfall is expected to be between 6,000 and 7,500 tonnes—one of the steepest in decades. Since most silver is produced as a by-product of other metals like gold, lead and zinc, expanding supply remains difficult. Demand has exceeded supply every year since 2020.

2. Anticipated US Interest Rate Cuts:
Mounting expectations that the US Fed will lower rates, amid forecasts of continued economic slowdown into 2026, are pushing investors toward non-interest-bearing assets such as silver and gold.

3. Weakening US Dollar:
A softer dollar makes dollar-priced commodities more affordable for global buyers, lifting demand for silver.

4. Depreciating Indian Rupee:
The rupee’s recent weakness against the dollar has made imported silver more expensive, adding to domestic price pressure.

Investment demand for silver is projected to reach 1,751 tonnes in 2025—an increase of 350 tonnes from 2024, according to Metals Focus. The surge is tied to persistent market deficits—now in their seventh year—with cumulative shortfalls nearing 25,000 tonnes since 2021. Structural constraints on supply, coupled with rising industrial use, have intensified demand. Strong retail and institutional buying, especially across Asia and North America, has driven inflows into silver-backed ETPs, coins and bars, further boosting momentum amid global economic uncertainty.