Global Supply and Investor Actions Drive Silver Price Drop
The silver price drop in 2025 saw the metal fall 17% after hitting record highs, reflecting higher global supply and profit-taking by investors. https://www.silverinstitute.org/
On Friday, silver finished at ₹1.47 lakh per kg, a sharp fall from the all-time high price of ₹1.78 lakh per kg on October 14. Analysts say this decline is due to better availability of silver in London and profit-taking by investors.
Global Silver Market Correction: Globally, spot silver prices fell to $48.5 per troy ounce on Friday from $54.47 a week ago. Analysts said higher shipments of the metal from the US and China into London alleviated the supply shortage that had previously driven the rally.
London, the world center of physical silver trading, largely dictates global prices. A deficit at its vaults had earlier pushed prices to record levels in India, but now that supply is coming back to normal, the market is witnessing a correction phase.
Reasons Behind the Silver Price Drop and Global Supply Trends
Jewelry demand did not solely drive the previous surge in silver prices. Firm industrial demand from the solar sector, electric vehicles, 5G infrastructure, and AI hardware also made the metal a central element in the worldwide green revolution. Limited mining and poor recycling further kept the supply bound, piling on the pressure. But following such quick gains, merchants started taking profits, and long-term players revalued their positions.
Vikram Dhawan, head of commodity and fund management at Nippon India Mutual Fund, told ET, “While short-term traders were readjusting exposures, strategic investors — including central banks and long-term exchange-traded fund (ETF) participants — could view the decline in prices as a normalisation phase following months of momentum-driven inflows.”
Gold Prices Follow the Same Trend
Gold, too, saw a sharp decline. It fell ₹8,395 per 10 grams (6.41%), reaching ₹1,22,419 per 10 grams at the retail level (excluding 3% GST).
Analysts linked this correction to profit-booking and a stronger US dollar. Dhawan added, “The broader asset allocation story remains intact, owing to the historical role of gold and silver as effective portfolio diversifiers and long-term stores of value. In such an environment, a disciplined and diversified investment approach is better suited than short-term reactions to volatility.”
Demand Stays Firm Despite Correction
In spite of the setback, buyers continued to buy gold and silver through coins and ETFs during Dhanteras on October 18 and 19 to take advantage of the dip.
Global supply issues are still present. This year, silver is expected to have a 6,000–7,500 tonne deficit of its estimated 26,000 tonnes total production, which is among the largest deficits in decades, according to the Silver Institute.
Manav Modi of Motilal Oswal Financial Services noted ongoing geopolitical uncertainty: “The planned summit between the US President Donald Trump and the Russian President was postponed. Uncertainty remains over a possible meeting between Trump and Chinese President Xi Jinping. So, any dips could trigger fresh buying interest due to ongoing global uncertainties.”
He further hinted that silver prices may fall slightly more, offering new entry points for buyers, though he stressed that “fundamentals of both metals remain strong.”
Retail Investors Stay Cautiously Optimistic
Jateen Trivedi, vice president and research analyst at LKP Securities, said retail investors are “using this dip as an opportunity to re-enter gradually through small allocations, given the broader positive long-term outlook for gold amid global liquidity and central bank buying trends.”
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