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Informist, Wednesday, Jun. 11, 2025

 

By Ashutosh Pati

 

MUMBAI – The beginning of trade talks between the US and China triggered a risk-on sentiment as prices of silver broke the key technical resistance of $35 per ounce on the COMEX and climbed nearly 7% since Thursday. Analysts expect further upside in prices of the white metal due to strong fundamentals such as robust industrial demand and continued supply deficit in the global market.

 

Another major factor supporting silver is its significant undervaluation compared to gold. Despite being a precious metal with both safe-haven appeal and industrial uses, silver was not the first choice for investors and was lagging gold in terms of returns for quite some time. However, a reversal in the gold-silver ratio has experts hoping that silver will outperform gold in terms of returns in the coming months.

 

On the domestic bourse, silver prices have gained around INR 6,000 per kilogram since Jun. 4 and hit all-time highs for four straight sessions. "Technical short covering in the $34.50–$37.00 range has led to a price rally. With this momentum, silver's technical target is set at $40 (per ounce) internationally and INR 130,000 (per kg) domestically by year-end," said Ajay Kedia, director at Kedia Advisory.

 

Prices of both silver and gold have risen significantly this year with the latter giving nearly 30% return and the former around 23%. "...unlike gold, which must break new record highs to continue its advance, silver remains well below its 2011 peak near $50, potentially offering room for further outperformance as investors hesitate to buy gold at record prices," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note to clients.

 

On the industrial front, silver continues to gain strong support from its extensive use in solar energy and green technology applications. Further, the gold-silver ratio, which shows the ounces of silver required to buy one ounce of gold, had surged to 104 in around April, indicating that silver was heavily undervalued compared to gold.

 

"One of the reasons why it did not rally was because at that time gold was more attractive for the market because it is also the preferred metal as far as safe haven goes for government and central banks altogether," said Riya Singh, a research analyst at Emkay Global Financial Services. The gold-silver ratio has now retraced back to nearly 92, "...this is what a balancing of scale looks like whenever an opportunity arises with respect to the gold and silver," Singh said.

 

"The fact that the price of silver has underperformed gold over a longer period of time has led to a significant undervaluation of silver compared to gold," Carsten Fritsch, commodity analyst at Commerzbank, said in a report. "As a result, the gold/silver ratio rose to well over 100 in April, which had previously only been seen during the coronavirus pandemic five years ago," Fritsch added.

 

At 1311 IST, the most-active July silver contract on COMEX was 0.1% higher at $36.69 per ounce and the same month contract on the Multi Commodity Exchange was at INR 106,551 per kg, down 0.2% from the previous close.

 

Adding further tailwinds to prices is the sustained supply deficit in the global market. The global silver market is expected to be in a deficit for the fifth consecutive year at 117.6 million ounces in 2025, according to the Silver Institute. Total demand is projected to fall slightly to 1.15 billion ounces and total supply of the metal is estimated to rise by 1.5% to 1.05 billion ounces, led by higher mine production. The global silver market was in a deficit of 148.9 million ounces in 2024 and 184.3 million ounces in 2023.

 

If prices of the white metal sustain above $36.25 per ounce in the international market, Singh believes a rally "at least until 38" is possible in the short term. Sriram Iyer, a senior research analyst at Reliance Securities, said next resistance for silver is at $37.60 per ounce and "if it breaks, then it has potential of up to $44 in the future." On the domestic bourse, the initial resistance is at INR 115,000 per kg and Iyer believes prices can rise to INR 123,000-INR 125,000 per kg in the coming months.  End

 

US$1 = INR 85.51

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

 

Edited by Akul Nishant Akhoury

 

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