Silver prices corrected sharply on Wednesday, settling 1.6% lower at Rs 3,18,492 per kg, as investors booked profits after the metal’s recent steep rally. The pullback came amid a brief easing of immediate geopolitical risk, which reduced the urgency for aggressive defensive positioning across precious metals.
The correction followed a phase of rapid gains that had pushed silver into overbought territory, leaving the market vulnerable to near-term consolidation. However, analysts noted that the downside remained limited, as broader macro and geopolitical risks continue to support safe-haven demand.
Renewed uncertainty linked to Donald Trump has kept underlying sentiment cautious. Trump’s fresh push to acquire Greenland, along with his refusal to rule out the use of force, has unsettled global markets. Adding to the uncertainty, his threat to impose higher tariffs on several European nations if negotiations fail has revived fears of a renewed transatlantic trade conflict. These developments have reinforced demand for precious metals, including silver, as investors hedge against policy shocks and currency volatility.
From a fundamental perspective, silver continues to be supported by a structural supply deficit. The global silver market has now recorded four consecutive years of supply shortfall, with demand consistently exceeding mine production and scrap supply. This imbalance has become a key long-term pillar for prices.
As of end-December 2025, silver holdings in London vaults stood at 27,818 tonnes, up 2.3% month-on-month. Despite the increase, inventories remain historically tight when measured against global consumption. In Asia, Chinese silver stockpiles have dropped to their lowest levels in nearly a decade, following record exports of over 660 tonnes in October, highlighting regional shortages and liquidity stress outside the US and UK markets.
Looking ahead, the broader outlook for silver remains constructive, though volatility is expected to persist. Commerzbank has reiterated its target of $95 per ounce by end-2026, while HSBC expects prices to remain elevated but choppy, supported by strong institutional investment demand even as industrial usage shows signs of moderation.
Overall, while near-term profit booking has triggered a correction, persistent geopolitical risks, Trump-led tariff uncertainty, and entrenched supply deficits continue to provide a strong floor for silver prices.
