Silver outlook 2026: Why industrial demand and deficits may fuel the next leg of rally

Silver staged one of the most dramatic rallies in commodities in 2025 — and the momentum has spilled into the new year. According to Tata Mutual Fund, prices of the white metal surged nearly 161% last year, touching an all-time high of $86.62 an ounce on December 29 before easing to around $72 in early 2026 as investors booked profits and the CME raised margin requirements.

The pause proved brief. Silver has already climbed more than 9% in the first week of 2026, hitting fresh records on India’s Multi Commodity Exchange (MCX) on January 7. On global markets, COMEX prices briefly crossed $82 an ounce, underscoring that the rally is being driven not just by speculation but by tightening fundamentals.

What is powering silver’s surge?

Tata Mutual Fund attributes the sharp move to a rare convergence of strong demand, structural supply constraints and rising investor interest.

Nearly half of global silver consumption now comes from industrial use, particularly in solar panels, electric vehicles, electronics and increasingly in AI-linked hardware. This has turned silver into a strategic metal rather than just a precious one.

On the supply side, the market remains structurally tight. Silver is largely mined as a by-product of other metals, limiting the ability of producers to respond quickly to higher prices. China’s new export licensing rules — which restrict shipments from smaller producers — are expected to worsen the global shortfall, potentially widening the annual deficit from about 2,500 tonnes to more than 5,000 tonnes.

The numbers tell the story. In 2025, global mined supply was estimated at 813 million ounces, while total demand crossed 1.24 billion ounces, marking the fifth straight year of deficit. Inventories in key hubs such as London, China and the US have fallen to multi-year lows.

India’s growing role

India has emerged as a major force in the silver market. The country imported over 170 million ounces in the first ten months of 2025, with a sharp spike of more than 2,600 tonnes in September and October alone. The surge reflects both strong retail demand and rising industrial consumption, especially from the solar and electronics sectors.

Outlook: bullish, but volatile

Tata Mutual Fund believes silver’s long-term outlook remains constructive, given its dual identity as a precious and industrial metal. However, the fund cautions that sharp corrections cannot be ruled out in 2026 as prices remain elevated and vulnerable to profit-taking, portfolio rebalancing and shifts in global growth expectations.

In early 2026, MCX March futures touched a record ₹2,59,692 per kg before easing on profit booking. The rally has been reinforced by geopolitical tensions in South America, tighter Chinese export controls and expectations of a softer dollar — all factors that traditionally support precious metals.

How investors can play silver

Given the volatility, Tata Mutual Fund advises investors to avoid chasing prices. Instead, a staggered investment approach through systematic investment plans (SIPs) or phased buying is seen as a better way to gain exposure while managing risk.

Investors can access silver through mutual funds and ETFs focused on precious metals, but should remain mindful that prices are influenced by a complex mix of industrial demand, geopolitical risks, interest-rate expectations and currency trends.

A standout performer

Silver’s performance in 2025 was exceptional even by commodity standards. In India, prices jumped 166.4%, rising from ₹89,700 per kg at the end of 2024 to nearly ₹2.4 lakh per kg a year later. Globally, prices more than doubled from $28.97 to $71.67 an ounce, consistently outperforming gold.

With demand from clean energy, EVs and advanced electronics accelerating — and supply struggling to keep pace — silver has moved beyond its traditional role as a hedge metal. As 2026 unfolds, the white metal is increasingly being seen as a barometer of the world’s energy transition and technological shift, making it one of the most closely watched assets in global markets.