Investors are fearful inflation may rise further, and interest rates may stay high for a long time.
“Concerns about global manufacturing activity and industrial demand weighed on silver,” says Krishanu Choudhary, director & unit head, Anand Rathi Wealth.
“Sustained investments in electric vehicles (EVs) and AI-related technologies could drive industrial demand higher,” says Deveya Gaglani, senior research analyst – commodities, Axis Securities.
High interest rates could slow down the global economy and reduce industrial demand.
“Long-term systematic investment plan investors should continue disciplined monthly investments if silver remains suitable for their portfolio,” says Sawant.
Why silver fell
Silver has fallen 16 per cent year-to-date and 13.3 per cent over the past month. “The correction reflects a macro-driven repricing amplified by crowded speculative positioning,” says Saish Sawant, research analyst – commodities, Emkay Global Financial Services.
Many investors booked profits. October’s equity and technology selloff forced investors who had borrowed and invested to sell precious metals.
The United States (US)-Iran conflict has pushed crude to multi-year highs. Investors are fearful inflation may rise further, and interest rates may stay high for a long time. Higher bond yields drive up the opportunity cost of holding silver.
“Concerns about global manufacturing activity and industrial demand weighed on silver,” says Krishanu Choudhary, director & unit head, Anand Rathi Wealth.
A slowdown in the tech sector may affect silver. “Silver has significant industrial exposure to semiconductors, artificial intelligence (AI) infrastructure and electronics,” says Kaynat Chainwala, assistant vice president, commodity research, Kotak Neo.
“Solar manufacturers’ thrifting (efforts to use less) of silver has eroded a key source of demand,” adds Sawant.
Look beyond the fall
The long-term investment case for silver is dented but intact. It will retain its monetary and safe-haven role. “Sustained investments in electric vehicles (EVs) and AI-related technologies could drive industrial demand higher,” says Deveya Gaglani, senior research analyst – commodities, Axis Securities. The Silver Institute expects supply to fall short of demand for the sixth consecutive year in 2026.
Prices are expected to remain under pressure in the near term. The outlook for Indian silver over the next six to 12 months
will depend on US interest-rate expectations, the dollar, global economic growth, geopolitical developments and industrial demand.
High interest rates could slow down the global economy and reduce industrial demand. “Further downside remains possible while crude prices stay elevated, US yields remain firm and the Federal Reserve maintains a hawkish bias,” says Chainwala.
But the near halving of prices from their peak on the Multi Commodity Exchange (MCX) of India could draw bargain hunters back. “Meaningful geopolitical de-escalation or the resolution of ongoing conflicts could improve sentiment and trigger a recovery,” says Gaglani.
Lower yields and a weaker dollar could help. “Doubts about the sustainability of AI investment have already led markets to trim expectations of further rate hikes,” says Sawant.
Review what you hold
Investors who bought near the peak should avoid selling in panic. Those who can hold for five years or longer should stay invested.
“The decision to average down should depend on risk appetite, investment horizon and conviction in long-term demand,” says Chainwala. Add gradually, rather than all at once.
“Long-term systematic investment plan investors should continue disciplined monthly investments if silver remains suitable for their portfolio,” says Sawant.
If silver exceeds your allocation target, rebalance the portfolio. “Recoveries or sharp rallies may offer opportunities to reduce exposure gradually,” says Choudhary.
Do not engage in desperate moves to recover lost money. “Avoid leveraged bets,” says Manav Modi, commodities analyst, Motilal Oswal Financial Services.
Enter gradually
Prices appear more attractive now, but new investors should resist buying aggressively. “Stagger purchases to reduce the risk of entering immediately before another decline,” says Modi. Allocate about 3-5 per cent of your portfolio to silver.
