Why AI, solar and EVs could keep silver prices elevated despite a 44% crash in 2026

Silver prices may have retreated sharply from their record highs earlier this year, but analysts believe the metal's long-term bull case remains intact, supported by structural supply shortages and rising demand from sectors ranging from solar energy and electric vehicles to artificial intelligence and data centres.

The white metal is currently trading around $64.50-$65 per ounce globally and about ₹2.6 lakh per kg in India, with MCX silver futures hovering near ₹2.75 lakh per kg. Despite a steep correction from January peaks, many market participants continue to see significant upside over the medium term.

Sharp correction

Silver touched an all-time high of $121.64 per ounce globally and ₹4.1 lakh per kg on MCX in late January 2026 before undergoing a steep decline. Prices have fallen around 44% internationally and 40% in India from those peaks.

The correction was triggered by a combination of factors. Higher margin requirements imposed by CME Group forced leveraged traders to unwind positions, while a stronger US dollar and profit-booking after silver's 147% rally in 2025 accelerated the decline.

However, analysts say the selloff was largely technical and has not altered the metal's long-term fundamentals.

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Inflation angle

The rising importance of silver is also becoming visible in India's inflation data.

According to SBI Research's latest Ecowrap report, silver jewellery contributed 56 basis points to headline inflation in May, making it the single largest contributor among individual items. Gold contributed 30 basis points, while petrol added 14 basis points. The report also noted that global commodity trends showed stronger inflation in silver compared with gold.

The surge in silver prices also pushed up inflation in the personal care category by nearly 80 basis points in May.

Supply deficit

One of the biggest reasons behind the bullish outlook is the persistent mismatch between demand and supply.

Industry estimates suggest 2026 will mark the sixth consecutive year in which global silver consumption exceeds mine production. Unlike gold, which is largely stored in vaults, more than half of silver demand is industrial and much of it is permanently consumed.

Since most silver production comes as a by-product of copper and zinc mining rather than dedicated silver mines, supply growth has struggled to keep pace with rising demand.

AI, Solar and EVs

Silver's unique properties are increasingly making it indispensable for new-age industries.

Solar panels are one of the largest consumers of the metal, and global installations continue to hit record levels. India's own renewable energy targets are expected to support strong demand over the coming decade.

Electric vehicles are another major growth driver. Industry estimates indicate that EVs use roughly twice as much silver as conventional petrol-powered vehicles because of their higher electrical content.

Artificial intelligence is also emerging as a powerful source of demand. Silver is the most electrically conductive metal and plays an important role in servers, semiconductors and thermal management systems used in AI data centres. As global AI infrastructure spending accelerates, silver consumption from the technology sector is expected to rise significantly.

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Silver imports

The Centre has moved to curb rising imports of the precious metal after India's silver import bill surged to a record $12 billion in FY26, compared with $4.8 billion a year earlier.

Imports jumped 157% year-on-year to $411 million in April. In response, the government has brought additional forms of silver under the restricted category, requiring prior authorisation from the Directorate General of Foreign Trade (DGFT).

The government has also increased import duties on gold and silver to 15% from 6% as part of efforts to contain pressure on foreign exchange reserves.

Long-term forecasts

Several analysts continue to expect silver prices to recover in the second half of the year.

Forecasts from firms such as WalletInvestor and LongForecast suggest silver could reach $95-$106 per ounce by the end of 2026. More optimistic projections from Bank of America see prices moving substantially higher, although analysts acknowledge that much will depend on US Federal Reserve policy and the direction of the dollar.

Ponmudi R, CEO of Enrich Money, said COMEX silver has recovered from support around $64-$62 and is currently trading above $68, though the broader structure remains weak.

He said a sustained move above $72-$73 would be needed to improve sentiment and trigger a stronger recovery.

Despite recent volatility, analysts believe silver's long-term fundamentals remain among the strongest in the commodity universe, with AI, solar power and electric vehicles emerging as powerful drivers of future demand.

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