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Informist, Thursday, Jan. 22, 2026

 

MUMBAI – The record rally in silver prices is expected to continue shaping demand patterns in 2026. While elevated prices are likely to undermine consumption across jewellery, silverware and industrial sector, investment demand covering bars, coins and exchange-traded products is expected to remain healthy on the back of positive price expectations, according to a weekly report on precious metals by Metals Focus.

 

Fabricators are responding to high prices through light-weighting, higher purity products and increased use of gold-plated silver, but these measures are unlikely to fully offset the impact of record prices. As a result, in 2026, silver jewellery offtake is expected to fall 12%, silverware demand to decline 15%, while physical investment is forecast to rise about 7% on year from an already elevated base, reaching the highest level since 2022, the report by the consultancy firm said.

 

Silver has extended last year's sharp rally into January, with rupee prices rising nearly 40% so far this year after a surge of about 170% in 2025. The metal has crossed multiple psychological levels, most recently breaching INR 300,000 per kilogram.

 

"Looking back at 2025, although silver prices were far lower than today, they were still elevated," the report said. As a result, silver demand was relatively weak and so bullion imports were subdued in the first half of 2025, falling 44% on the year to 2,426 tonnes.

 

The local silver price crossed INR 100,000 in June and went on to hit successive record highs, peaking at INR 175,000 in October. The rally lifted consumer and investor confidence, supported by silver's historical tendency to outperform gold during bullish phases, and spurred fresh buying during the seasonally strong second half, according to the weekly report.

 

"Despite silver jewellery's relative price advantage against gold, the absolute rise in silver prices has made it unaffordable for large parts of rural India, historically the backbone of the country's silver jewellery market. Fabricators are already responding by aggressively reducing weights in traditionally heavier items such as payals (anklets) and silverware, including idols. Some are also adopting newer technologies, such as paper casting, which can reduce weights by 60–70% while maintaining similar hardness and finish," the report said.

 

Despite the sharp price rally since June, retailers began building festive season inventories from late August, while manufacturers reported strong sales at the India International Jewellery Show, indicating heightened consumer interest. Investment demand surged in September and October amid fear of missing out, even as tightening physical liquidity in London pushed local premiums sharply higher, with silver briefly trading at a $10 per ounce premium to global prices, it said.

 

Alongside strong bar and coin demand, India's silver exchange-traded products market has expanded rapidly, growing to 14 listed funds since its launch in 2022. Inflows in 2025 were estimated at 2,200 tonnes, lifting total holdings to about 3,600 tonnes by end of December, and supporting stronger bullion imports from August, according to the report.

 

More recently, the price rally has dampened jewellery and silverware demand, with a sharp slowdown seen after Diwali in mid-October. Investment demand also eased in November amid profit-taking, before recovering again in late December, the report said.  

 

"Higher purity levels, driven by growing consumer awareness of 925 purity sterling silver, and increased adoption of gold-plated silver may offset some of the decline. Nevertheless, these gains are unlikely to fully counteract the impact of high prices, and so we expect a 12?ll in silver jewellery offtake in 2026," said the consultancy.  End

 

US$1 = INR 91.60

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Udita S. Jaiswal

 

Edited by Deepshikha Bhardwaj

 

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