Silver prices likely to cross ₹1 lakh per kg in medium to long term: Motilal Oswal

The silver prices have maintained a consistent upward trajectory in 2024 in India. After recording a 7.19 per cent increase in 2023, the precious metal has now reached a historic high of ₹86,300 per kg. The bullish outlook is further bolstered by forecasts from brokerage firm Motilal Oswal, projecting prices to potentially soar to ₹1 lakh or even ₹1.2 lakh per kg in the medium to long term.

“We continue to be strongly positive in Silver over the next few months, but will it be a straight upside or with volatility is difficulty to time. We advise to be invested in silver and keep adding on dips towards ₹75,000 for a medium to long term upside towards ₹92,000 followed by ₹100,000. This positive sentiment is echoed globally, as silver prices surge to a three-year peak in international markets,” the brokerage firm said in its report.

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Silver has been witnessing sharp swings in prices over the last few quarters, influenced by a complex interplay of factors spanning economic data points, geopolitical tensions, and market-specific dynamics.

“Last year we did witness slower performance as compared to Gold however, returns of domestic silver looked better amidst the rise in basic custom duty and rupee depreciation. In this year, silver’s journey on higher side was a bit delayed as compared to Gold but it caught the pace well and has posted ~9.5% gains YTD on domestic front,” it added.

What’s weighing on silver prices in India?

• Rising geopolitical tensions and expectations of US interest rate reductions have spurred a heightened demand for safe-haven assets.
• Speculative trading activity and investor sentiment have not a played a significant role in shaping silver is price movements since quite a long time. In just two months of 2024, silver imports have crossed 2500 tonnes giving a boost to the sentiment.
• According to the Silver Institute, the demand for silver used in photovoltaics (PV) in 2023 is estimated to be around 161 million ounces, a rise from 140 million ounces in 2022, constituting approximately 13% of total global silver demand. This demand is projected to continue escalating in tandem with the expansion of solar installations, emerging as a primary source of renewable energy worldwide. By 2028, the International Energy Agency forecasts that solar photovoltaics (PV) will contribute roughly 13% to the total global electricity capacity, a significant increase from its current share of approximately 5%. However, the report suggests that the surge in demand for silver in solar PV systems over the next five years and beyond may not be matched by a corresponding increase in supply.

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• The silver supply encountered several challenges impacting market dynamics, including operational disruptions at mines and environmental regulations limiting production levels in significant silver-producing areas. Forecasts indicate that the total global silver supply is expected to increase by 3% in 2024, reaching an eight-year peak of 1.02 billion ounces, primarily driven by a resurgence in mine output.
• The projected global silver demand for 2024 stands at 1.2 billion ounces, potentially marking the second-highest level ever recorded. A significant driver behind this surge is the increased industrial consumption of the metal, with the sector anticipated to achieve a new yearly peak. According to data from the Silver Institute, global silver demand is anticipated to grow by 1%, buoyed by sustained industrial applications and a rebound in both jewelry and silverware demand.