Silver Prices Break Records — Here’s What’s Driving the Rally and If You Should Buy

Silver prices scaled fresh all-time highs on Wednesday, December 17, sharply outperforming gold and drawing investor attention across global markets.

The rally comes even as gold trades largely sideways, prompting a key question: why is silver racing ahead, and does it still make sense to buy at current levels? On the Multi Commodity Exchange (MCX), silver surged more than 4% in early trade. Around 9:20 am, MCX silver was up 3.38% at Rs 2,04,445 per kg, after touching a lifetime high.

Gold, in contrast, moved lower. MCX gold for February delivery slipped 0.21% to Rs 1,34,129 per 10 grams, underscoring the growing divergence between the two precious metals. The trend was mirrored globally. Spot silver jumped 2.8% to a record high of $65.63 an ounce, crossing the $65 mark for the first time. Spot gold rose a modest 0.4% to $4,321.56 an ounce, supported mainly by a weaker US dollar.

Why silver is outperforming gold

Market participants say silver’s rally is being driven by more than safe-haven demand. Unlike gold, silver plays a dual role as both a precious and an industrial metal—an advantage that is proving crucial in the current cycle.

V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said both metals have delivered strong returns this year, but silver has clearly led the pack. “Both gold and silver are safe-haven assets and have performed well, but silver has outperformed with nearly 80% returns. What sets silver apart is its extensive industrial usage,” Vijayakumar said.

He pointed to rising demand from fast-growing sectors such as electric vehicles, solar energy and electronic devices. “Strong growth in these industries, combined with limited supply of this scarce metal, has pushed prices sharply higher. While some profit-booking is possible, silver prices are likely to remain resilient,” he added.

Aamir Makda, Commodity and Currency Analyst at Choice Broking, said silver’s move above $65 signals a structural shift. “Crossing the $65 level marks the dawn of a new era for silver. As silver prices overtake crude oil for the first time in 40 years, the market is signalling that the future belongs to critical and scarce resources,” he said.

Makda noted that silver trading above a barrel of crude oil is a rare phenomenon last seen in the late 1970s and early 1980s. “This inversion highlights silver’s growing strategic importance as an industrial metal,” he said.

US data, rate-cut bets lift silver

The latest rally was triggered by fresh US economic data. The US unemployment rate rose to 4.6% in November, strengthening expectations that the Federal Reserve could deliver further rate cuts in 2026.

A softer labour market, combined with a dovish tone from the Fed after its recent quarter-point rate cut, has boosted demand for non-yielding assets such as silver. The US dollar index also slipped to a two-month low, supporting dollar-denominated commodities.

Dr Renisha Chainani, Head of Research at Augmont, said silver touched record highs after mixed US jobs data shifted investor focus. “Silver hit new all-time highs near $66 after mixed US employment data encouraged investors to seek assets that can preserve value amid uncertainty,” she said.

While job creation exceeded expectations, the rise in unemployment has reinforced expectations of up to two interest-rate cuts in 2026, with nearly 59 basis points of easing already priced in, Chainani added.

Supply deficit and rupee weakness add momentum

A persistent supply shortfall has further strengthened silver prices. Makda said the metal is now in its fifth consecutive year of supply deficit. “On top of that, weakness in the Indian rupee has accelerated gains in dollar-denominated commodities,” he said.

From a technical perspective, Makda advised caution at elevated levels. “Immediate support lies near the 20-DEMA at Rs 1,82,300. Traders should consider buy-on-dips strategies if prices correct by 3–5%,” he said.

Chainani highlighted key levels to watch. Internationally, silver has support around $62 an ounce and resistance near $67. In the domestic market, support is seen around Rs 1,94,000 per kg, while resistance lies near Rs 2,08,000 per kg.

What about gold?

Despite silver stealing the spotlight, analysts say gold’s long-term fundamentals remain intact, though short-term corrections are possible. Ross Maxwell, Global Strategy Operations Lead at VT Markets, said gold may face near-term pressure after a strong rally this year.

“After gaining around 60%, gold prices are vulnerable to correction, even though the fundamental drivers—global uncertainty, central bank buying, rate-cut expectations and currency weakness—remain supportive,” he said.

Maxwell advised investors to stay balanced. Existing holders may consider partial profit-booking while maintaining core exposure, while new investors should adopt a staggered buying approach instead of chasing prices.

Should investors buy silver now?

Experts remain constructive on silver’s long-term outlook, citing strong industrial demand and limited supply. However, the sharp run-up suggests investors should be mindful of near-term volatility.

While short-term corrections cannot be ruled out, analysts believe any dips could attract fresh buying interest. For long-term investors, silver continues to offer diversification benefits, particularly as global economies accelerate the transition towards clean energy and technology-driven growth.