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Brokerage house Motilal Oswal Financial Services estimates that the price of silver in the domestic market may reach Rs 1.25 lakh in the next 12-15 months. However, the brokerage says that due to the recent rise of more than 30%, profit booking may be seen from time to time, but any major decline can be used as a buying opportunity.
Currently, there is strong support for silver at the level of ₹ 86,000 to ₹ 86,500. At the same time, geo-political tension, silver demand and supply, action of central banks and China’s impact on silver can play an important role in increasing its price. Let us know about these four reasons.
Geo-political tension
Gold and silver prices tend to rise in times of panic and anxiety. The war between Russia and Ukraine in 2022, the Israel-Hamas war in 2023 and all geo-political tensions are still active. At the same time, updates are also coming about possible tensions between China and Taiwan. Along with this, economic uncertainty due to the election year in America can also increase the price of silver.
Silver Demand and Supply
Silver demand is expected to grow marginally due to industrial applications. However, supply remains constrained due to mining challenges. Silver demand is projected to exceed supply for the fourth consecutive year in 2024. This suggests that the market balance for silver will remain in deficit, which will contribute to increasing its price.
Actions by central banks
The US Federal Reserve raised interest rates from 0% to 5% in a year and is now stable. The Fed has not yet announced any change in interest rates in 2024. It has maintained a cautious stance amid easing inflation pressures. Market expectations for an interest rate cut in September 2024 are around 70%, which is contrary to the Fed’s current stance, leading to a rally in precious metals.
Impact of China on Silver
China’s role as a major consumer and manufacturer of industrial materials impacts the global silver market. It is one of the only economies that went into a 3-year lockdown during the Covid pandemic.
Nevertheless, prospects of stimulus measures from the People’s Bank of China and strong imports indicate potential market stability. US elections, Middle East conflict and geopolitical tensions will drive silver prices higher.
Silver price now ₹ 91,827
According to the website of India Bullion and Jewelers Association (IBJA), today the price of one kg silver is ₹ 91,827. This year, silver reached its all-time high of ₹ 94,280 on May 29. At the same time, today the price of 10 grams of 24 carat gold is ₹ 72,664.
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