Whenever there is uncertainty and volatility in the financial markets, investors naturally start investing money in safe investment instruments. While gold gave strong returns this year, silver with its unexpected shine not only overtook gold but also created new history in the domestic and international markets. Silver prices on Multi Commodity Exchange (MCX) have reached close to Rs 2 lakh per kg, which is one of the highest levels ever. The rise in silver in the month of December was so tremendous that it rose by thousands of rupees per kg in just a few trading sessions and attracted the attention of investors and traders.
Gold pales in comparison to the shine of silver.
Experts say that many reasons are working together behind this tremendous shine of silver. The biggest reason is the increase in industrial demand—the use of silver is increasing rapidly in electric vehicles, solar panels, semiconductors, data centers and various high-tech equipment. The world is moving towards green energy, and silver has become an integral part of many important technologies. Due to this, the demand for silver at the international level is likely to increase continuously for many years to come. Meanwhile, supply is being limited and lease rates are also increasing, indicating that the availability of silver in the market is decreasing—which is a major reason for the rise in prices.
Apart from this, the third consecutive 25 basis point cut in interest rates by the US Federal Reserve has also supported silver prices. Reduction in interest rates weakens the dollar, and as the dollar weakens, the shine of precious metals like gold and silver increases. On Wednesday, a big jump of Rs 6,595 was seen in silver in a single day and it reached a new record level of Rs 1,85,488 per kg. Even in the international market, silver went above $61 per ounce, which is historic. Earlier on December 8 also, it had made a record of Rs 1,79,088 per kg.
Why did the shine of silver increase?
At the domestic level too, many factors are pushing silver prices higher. Continued weakness in the Indian rupee, increased buying during the festive season, heavy demand at weddings and strong inflows into silver ETFs – all these together have pushed silver prices sharply higher. Also, as risk aversion trend increases in the market, silver has become an attractive option as a safe investment instrument.
Now that silver has come close to touching the level of Rs 2 lakh per kg, investors are keeping an eye on what its trend will be in the coming days – will this bullish trend continue or will there be some stagnation due to profit booking. However, looking at the current global and domestic circumstances, experts believe that the shine of silver does not seem to be slowing down at the moment.
Also read: Rupee’s decline is not stopping even after crossing 90, again defeated by US dollar
