Silver’s performance in 2025 was unprecedented in recent history. According to Motilal Oswal, prices rose from Rs 90,000 in April to Rs 2.5 lakh at the end of December – a move that occurred at a pace rarely seen in the commodities sector.The report notes that the silver market gained strength in phases, with rallies accelerating in shorter intervals as the year progressed.
This rally was driven by a combination of acute physical tightness, rising industrial use, declining currency supplies and demand for safe havens driven by geopolitical and monetary uncertainties.
The Supercycle Framework: Why Silver May Not Be Ready Yet
Motilal Oswal’s report positions the 2025 silver rally not just as an isolated event, but potentially as part of a broader commodity supercycle. This structural setup, according to the broker’s memorandum, is supported by four important trends:
1. Industrial demand and the energy transition
The dual nature of silver as a precious metal and as an industrial commodity has become clearer. According to Motilal, industrial demand will reach new highs in 2025, led by applications in:
- Solar photovoltaic installations
- Electric vehicles
- Grid infrastructure and electrification projects
This demand, says Motilal Oswal, is expected to remain robust as countries ramp up clean energy adoption. Motilal Oswal suggests that silver’s growing role in clean energy applications could strengthen long-term price support.
2. Continued supply constraints
On the supply side, the brokerage points to chronic underinvestment in mining, declining ore grades and silver’s dependence on the extraction of base metal by-products. Stocks on the major stock exchanges also fell throughout the year. Silver stocks on the Shanghai Futures Exchange reportedly fell 30-40% from peak levels, while LME shares remained under pressure.
Motilal Oswal notes rare backwardation events in silver futures in 2025, due to acute near-term tightness.
3. ETF flows and investor interests
Investor participation returned strongly in 2025. According to the report, the domestic gold and silver ETF AUM has increased by more than 150% over the year. Motilal interprets this as a sign of renewed investor interest after a long lull. ETF flows, which had been largely negative in previous years, turned decisively positive in the second half of 2025.
4. Currencies and macro tailwinds
Motilal Oswal noted that the continued weakness of the US dollar index, coupled with the depreciation of the rupee, provided Indian investors with a double tailwind. Additionally, geopolitical tensions, shifting central bank policies, and the Fed’s cautious outlook continued to support silver’s appeal as a portfolio hedge.
Silver Outlook 2026: Early Strength, Later Volatility
Looking ahead, Motilal Oswal maintains a positive view on silver, but also signals potential turmoil in the second half of the year.
The company expects silver’s strength to continue to increase in the first half of 2026, citing continued policy and currency uncertainty. However, volatility may increase in the second half due to changing macro conditions, profit booking after the sharp 2025 rally and global interest rate action.
“Despite potential near-term corrections, strong structural demand and general uncertainties are limiting the downside, strengthening gold and silver as core portfolio hedges in a fragmented global macro landscape,” the report said.
Pricing objectives and strategy
Looking ahead, Motilal Oswal thinks silver could outperform gold by 2026. The brokerage cites improved economic prospects, higher industrial demand and expectations of rate cuts as key tailwinds that could drive further upside. In international markets, the brokerage sees silver prices hitting $30/oz on COMEX.
The brokerage has set a 2026 target of Rs 3,20,000 for MCX Silver, while the risk negative level has been placed at Rs 1,40,000. This represents a potential increase of 28% from current levels, assuming prices are around Rs 2.5 lakh.
The brokerage continues to maintain a Buy on Dips stance on silver through 2026.
Conclusion
While 2025 was a breakout year for silver, Motilal Oswal suggests that the underlying macro, industrial and supply-demand dynamics remain intact through 2026. As silver’s identity as both a precious and industrial metal becomes more relevant, the brokerage sees a supporting case for a continued uptrend, albeit with higher volatility as the year progresses.
Also read: Benchmark to reach 29,500 by end of 2026, says BNP Paribas, with backing from HDFC Bank and Maruti Suzuki among top bets
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)
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