Silver rates soar over 150% in 2025; why are silver prices rising? Explained with 5 key reasons

Silver has delivered dazzling returns in 2025, soaring over 150% so far this year, completely eclipsing the returns of equities and most other asset classes. International silver prices have soared 158% year-to-date. In comparison, gold has surged nearly 72% in the same period. Domestic spot silver prices have jumped 156% this year, compared with an 80% gain in spot gold.

On Friday, December 26, MCX gold February futures rose nearly 1% to a fresh record high of ₹1,39,216 per 10 grams, while MCX silver March contracts surged 4% to a record high of ₹2,32,741 per kg.

Why are silver prices rising?

A confluence of factors acted in favour of silver prices this year. let's take a look:

1. Strong industrial demand

Silver is witnessing strong industrial demand, especially from the sunrise sectors such as electric vehicles (EV), solar, semiconductors, and data centres. According to reports, more than half of all silver produced, or nearly 55–60% of total global silver demand, is consumed by industries. Data from the Silver Institute shows that silver's industrial demand reached a new record high for the fourth consecutive year in 2024, as it rose 4% last year to 680.5 million ounces (Moz).

"Silver is driven by the growing demand for it, emerging as a safe-haven metal, with increasing usages in solar power, electronic gadgets, and electric cars, apart from low supply levels and heightened investor flows," said Aksha Kamboj, Vice President for India Bullion and Jewellers Association (IBJA) and Executive Chairperson of Aspect Global Ventures.

2. Silver witnessing tight supply

While demand is high, silver supply remains tight, creating an environment of scarcity-driven prices. According to the Silver Institute’s latest report, the silver market is witnessing multi-year deficits.

The Silver Institute report states that global silver demand has exceeded silver supply for the fourth consecutive year, resulting in a structural market deficit of 148.9 Moz in 2024. During 2021-2024, the combined deficit reached 678 Moz, equivalent to 10 months of global mine supply in 2024.

3. FOMO-driven rally

While it is true that silver is witnessing heightened demand amid tight supply, experts also see the FOMO (fear of missing out) factor at play. Due to the sharp rise in silver and gold prices this year, more and more retail investors are buying silver as they anticipate the continuation of the uptrend.

"Apart from fundamentals, we are seeing a FOMO-driven rally among speculators, which has further accelerated the price move. Silver has touched a psychological level of around $75, adding to bullish sentiment," said Jigar Trivedi, Senior Research Analyst at Reliance Securities.

4. The Fed factor

Rate cuts by the US Federal Reserve and expectations of further rate reductions are driving a rally in non-yielding assets like gold and silver. The US Fed cut rates by 25 bps each in September, October and December this year, overall reducing the federal funds rate by 0.75 percentage points this year. There are expectations that the central bank will cut rates at least twice next year, which will further weaken the dollar and reduce the opportunity cost of gold and silver.

"While the U.S. has indicated the possibility of two interest rate cuts next year, markets are currently factoring in at least one. Regardless, the overall undertone remains positive for precious metals such as gold, silver, and platinum," said Trivedi.

5. Geopolitical factors

Rising geopolitical tensions and concerns over he impact of US tariffs on global economic growth have also driven investors towards safe-haven assets like gold and silver.

"The recent US military action in Nigeria related to ISIS, along with ongoing conflicts involving Russia and Ukraine, has created uncertainty in global markets. This has led to euphoria in bullion commodities overall," said Trivedi.

Gold and silver prices are scaling fresh highs almost daily. Experts believe there could be some intermittent technical pullbacks after such a sharp rally. However, aggressive sell-offs look unlikely. The broader sentiment remains supportive.

"With almost 7$ difference between the price of silver on Comex and Shanghai, the global arbitrage system and price discovery mechanism of silver has collapsed (normally this difference is less than $1). The silver price may further surprise everyone, as it is moving from the LBMA vault to China for better pricing," said Kamboj.

Read all market-related news here

Read more stories by Nishant Kumar

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.