Silver shines brighter than gold: What’s driving the rally and what lies ahead?

Silver prices hit fresh all-time highs

Gold's record run continues unabated but it is silver which is shining bright with one of its best showing in decades. The white metal, which started the year at $28.92 an ounce, soared to a new high of $49.57 on October 8.

In rupee terms, silver has outshone gold. While gold prices are up 56 percent, silver has surged nearly 69 percent this year. The rally has been driven by booming industrial demand, a global supply deficit and Fed cuts may continue to support silver prices.

Industrial demand driving momentum

Silver’s unique identity both as a precious and industrial metal has been the primary driver of the surge.

More than 60 percent of silver demand is directed towards industry, particularly in renewable energy, electronics, and electric mobility sectors.

“Rising investment and industrial demand along with recovery expectations in China is positively influencing silver prices,” as per Tata Mutual Fund Silver Outlook (October 2025) report.

As countries push decarbonisation and clean energy, demand for silver in solar panels and EV batteries continues to rise.

Fed policy and the dollar connection

Monetary policy shifts in the United States have also given silver a major boost. The Federal Reserve’s 25 basis-point rate cut on September 17 set off another rally.

“The expectation is that the US Fed may cut rates by 25 bps again in the October meeting if the labour market continues to show weakness,” states the report.

Fed rate cuts generally contribute to dollar depreciation, which in turn supports higher demand and prices for silver.

Supply deficit

The silver spike has also been supported by a fundamental supply shortfall. “Continuous fifth year for supply deficit of silver is a big boost for overall market sentiment,” states the report.

With industrial consumption rising faster than mine output, this imbalance could persist, providing a strong medium-term floor for prices.

The outlook also notes that in India, where about 92 percent of silver demand is met through imports, a weaker rupee makes silver more expensive domestically.

Silver outperforming gold

The fall in the gold-silver ratio is another indicator. It breached 85 mark in September and slipped towards 81, suggesting outperformance of silver over gold. As per the report the ratio is expected to decline further towards 75 as silver continues to benefit from a strong demand-supply imbalance.

“We believe strong investment demand, large silver supply deficit and Fed cuts may continue to support silver prices over the medium to long term for a three to five-year horizon. Silver may outperform gold in the medium term with favorable gold/silver ratio, recovery in developed economies, strong industrial demand especially from China, and global supply deficit projections," it adds.

However, one also needs to be mindful of short-term volatility and macro headwinds as silver’s dual role makes it sensitive to both economic and monetary factors.