Silver Price Surge Hits ₹3 Lakh, Physical Demand Cools in India

COMMODITIES

Overview

Indian silver prices have surged a dramatic ₹1 lakh per kilogram in one month, breaching the ₹3 lakh mark. This sharp ascent has cooled physical demand for silver articles, with local markets seeing discounts. However, investment in silver ETFs is climbing, and India's silver imports remain robust despite the price hike, contrasting with declining gold imports.

Rally Drivers and Expert Outlook

The surge in silver prices, which has added a staggering ₹1 lakh per kilogram in just four weeks to reach over ₹3 lakh, is being driven by a confluence of factors, including heightened geopolitical tensions and robust international demand. Kishore Roonwal, CEO of Anmol Silver, anticipates further appreciation, projecting prices could touch ₹3.30 lakh per kilogram.

Shifting Demand Dynamics

This rapid price escalation has significantly impacted physical demand within India. Consumers are scaling back purchases of silver articles, leading to price discounts in the domestic market for immediate physical silver transactions. This contrasts sharply with the US and China, where physical silver is commanding a premium, reportedly around ₹10,000 in China. While demand for silver jewellery shows resilience, the broader market for articles has seen volumes decline, though turnover remains steady due to higher per-unit prices.

Import Trends Diverge

Interestingly, India's appetite for silver imports remains strong, with volumes holding close to last year's levels despite the price run-up. This sustained import activity stands in stark contrast to a noticeable decline in gold imports, highlighting a shift in investor and consumer preference towards silver as a store of value or investment vehicle amidst current market conditions.

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