Here's what is driving the rally in silver prices

Silver prices surged to a fresh all-time high on the Multi Commodity Exchange (MCX), surpassing the `84,000 per kg milestone on April 12. The silver market has experienced significant fluctuations in recent quarters, driven by many factors, including economic indicators, geopolitical uncertainties, and unique market dynamics. 

Between 2013 and 2019, silver prices steadily declined due to various factors like a strong dollar, the Eurozone debt crisis, and economic slowdowns in major economies. However, according to Kaynat Chainwala, Senior Manager-Commodity Research at Kotak Securities, this trend might shift.

In fact, the rise in silver prices on the international market has already reached a three-year high, while on the local market, it has reached new all-time highs. 

The current rally is mainly driven by record-high gold prices, which, according to Anuj Gupta, Head of Commodities and Currencies at HDFC Securities, could also impact silver prices. 

Additionally, strong manufacturing data from the US and China, coupled with the growth of green energy infrastructure, could further boost silver demand. Experts suggest that silver is essential in sectors like photovoltaics (PVs), and as solar installations increase, so does the demand for the metal. 

India’s silver imports surged to a new peak in February amid rising prices and optimistic investment sentiments. Conversely, global silver supply is projected to increase by 3% in 2024, reaching an eight-year high of 1.02 billion ounces, primarily driven by a rebound in mine output, according to data from Motilal Oswal Financial Services.

As far as investments are concerned, the risk and return matters. Silver is a highly volatile commodity, and being an industrial metal and also a precious metal, price moves are subject to how global growth and monetary policy turn out, both of which remain highly uncertain at this point of time. 
     
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