Silver prices have skyrocketed and touched the Rs 1 lakh mark in the physical market for the second day running. The silver bullion traded at Rs 1,01,323 per kg on Tuesday compared to a gain of Rs 1,241 per kg for the previous day. The rise in silver prices has alarmed it might dampen demand by 15-20 per cent during the Dhanteras-Diwali festival, according to analysts.
Industry experts feel silver is up due to a long-time undervaluation of it. According to the national secretary of India Bullion & Jewellery Association, Surendra Mehta: “Silver could have begun trending upwards with the recent metal accumulation by Russia”. According to VP research analyst LKP Securities Jateen Trivedi: ” Silver is turning relatively inexpensive versus the yellow metal which is hovering at an all-time peak of over Rs 78,000 per 10 grams.
There has been a deficit in the silver market. The consumption quantity exceeds the production. Based on the consistent deficit with silver, industrial demand for silver, and undervaluation of silver compared with gold, Keith Neumeyer, CEO of First Majestic Silver, anticipates that silver may escalate towards US $100 per ounce. What Neumeyer derives the prediction from is based upon the necessity of the metal for emerging technologies like an electric vehicle and solar panel.
Other factors that have an impact on the silver price include the strength of the US dollar, changes in US Federal Reserve interest rates, geopolitical issues, and supply and demand dynamics. The central bank’s actions for gold, by extension to silver, are a very important factor, whereas geopolitical uncertainty and industrial demand are crucial factors behind the metal price.