Gold and silver prices have come under heavy selling pressure as rising energy costs, inflation concerns and escalating tensions in West Asia have unsettled global markets. Silver has faced a particularly steep correction, with prices falling nearly 55% from their peak.
In international markets, silver has dropped to around $53 per ounce, while domestic prices have declined from approximately ₹4.2 lakh per kilogram to around ₹1.95 lakh. The sharp fall has weakened expectations of a quick recovery, although silver remains a traditional purchase for many Indian households during Diwali.
Market experts say the outlook will depend on several factors, including the US dollar, bond yields, inflation data and expectations for Federal Reserve interest rates.
Why Silver Prices Are Falling
Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said the decline in precious metals had coincided with a wider sell-off in equity markets. According to her, some investors sold gold and silver to cover losses in technology stocks.
A stronger US dollar, rising bond yields and tensions in the Middle East have added to inflation concerns. These factors have contributed to the pressure on silver, which moved towards $54 per ounce, its lowest level since November 2025, according to Yadav.
Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, also pointed to the decline in domestic silver prices below ₹2 lakh per kilogram. He said volatility in the USD-INR exchange rate, changing interest rate expectations and speculative selling had contributed to the correction.
Market expectations have shifted towards a possible US Federal Reserve rate hike in December, followed by two additional increases in 2027. However, the Fed’s September projections had indicated only one further rate hike during the year, highlighting the uncertainty surrounding the interest rate outlook.
Could Silver Prices Fall Further Before Diwali?
Market participants believe silver could face additional pressure if the current sell-off intensifies. A further decline could create opportunities for traders and consumers looking to buy the metal during the festive season.
However, the direction of prices remains uncertain. Crude oil prices, upcoming US inflation figures and signals from the Federal Reserve will be important factors in determining silver’s near-term movement.
The US midterm elections scheduled for November 3 could also influence market sentiment. Modi said consumers may consider buying silver gradually near important support levels, while avoiding aggressive purchases until the election results provide greater clarity.
For short-term traders, the recent correction may offer opportunities, but price volatility and uncertainty over global developments remain significant risks.
Long-Term Silver Outlook Supported by Industrial Demand
Despite the recent decline, some analysts remain positive about silver’s longer-term prospects. Yadav highlighted a projected global supply deficit of 46.3 million ounces in 2026, alongside growing industrial demand from artificial intelligence infrastructure, data centres, electric vehicles and electronics.
Potential restrictions on Chinese silver exports could also tighten global supplies. Yadav said investors considering silver for the long term could explore buying during price declines, provided they follow appropriate risk-management measures.
These supportive factors, however, do not eliminate the possibility of further short-term losses.
What HSBC Says About Silver’s Future
James Steel, Chief Precious Metals Analyst at HSBC Global Investment Research, said renewed tariff concerns could trigger another rally in silver prices. He described prices as approaching levels that could be justified by underlying fundamentals, while maintaining a mildly positive outlook.
Steel expects industrial and jewellery demand to remain weak for the time being. Demand for large silver bars could increase, supported by institutional purchases, particularly from China and India.
He also expects demand for coins and smaller bars to recover gradually, although elevated prices could limit the pace of improvement. Silver-backed exchange-traded funds (ETFs), which experienced outflows earlier in the year, have begun rebuilding their holdings.
According to Steel, a stronger US dollar and elevated bond yields could restrict further gains. On the other hand, if anticipated interest rate increases do not take place, silver prices could move higher. Fiscal concerns and geopolitical risks may also provide support.
For buyers and investors, the current correction presents a market with both potential opportunities and considerable uncertainty. The next major moves in silver prices will depend on how global economic conditions, interest rate expectations and industrial demand develop.
Disclaimer: This article is for general informational purposes only and does not constitute investment advice. Precious metal prices can fluctuate sharply, and past movements or analyst forecasts do not guarantee future performance. Investors and buyers should assess their financial circumstances, understand the risks involved and consult a qualified financial adviser before making investment decisions.