Despite the stock market recovery and the Nifty 50 reclaiming the critical 20,000 milestone in November, the silver price rally exceeded the 50-stock index. Since November, silver prices have grown by 6% in the domestic market, while the precious white metal has risen by more than 9% in the overseas market, a return that is much higher than PPF or bank FD returns. In comparison to the silver price gain, the Nifty 50 index managed to achieve a near 5.30 percent MTD (month-to-date) rally of 4.96 percent, while gold price appreciated by only about 3%.
According to commodity market specialists, the recent rebound in gold and silver prices was aided by a decline in the US dollar rate and a 10-year US bond yield that has fallen close to 4% from 16-year highs of 5%. However, favorable attitudes in Chinese spending resulted in increased industrial demand for the precious white metal, allowing silver to outperform the major benchmark index and gold in November 2023.
Market expert Sugandha Sachdeva commented on the silver price surge, saying, "Silver has been shining bright, and has registered gains of around 5.87% this month and around 9.355 in international markets, while outperforming the benchmark index Nifty 50, which has gained by close to 5.33%." The decrease in US government yields and a steep corrective move in the dollar index have been important catalysts for the white metal's big gains. The decrease in US government yields and a steep corrective move in the dollar index have been important catalysts for the white metal's big gains. The dollar index has fallen by about 3.60% for the month after hitting a supply wall at 107.50. As inflationary pressures recede, there is rising speculation that the Federal Reserve of the United States has completed its monetary tightening programme and may begin rate decreases by mid-next year. The Fed's dovish stance has caused the greenback to weaken and renewed interest in white metal."
Sugandha explained why silver outperformed the Nifty 50 index: "After a consolidation period, silver established a key base in the $21-20.50 per ounce zone before experiencing an upward surge." Furthermore, geopolitical concerns, such as the conflict between Israel and Hamas, have fuelled interest in gold and silver as safe havens. Silver acts as an industrial metal in addition to being a precious metal, and the significant price increase reflects increased demand across numerous industries such as 5G technology, solar panels, and electric vehicles. Strong festive demand from India and China has also contributed to the current price surge. If prices can consistently break through the long-standing barrier of $26 per ounce, they may be able to go towards $29 per ounce by early next year."
Another reason for the silver price to rise
Anuj Gupta, Head of Commodity & Currency at HDFC Securities, highlighted the reasons that enabled silver to outperform gold and important benchmark indices of the Indian stock market, saying, "Triggers that worked for gold price rally have also worked for silver price rally." However, there was an additional driver for the silver price increase known as industrial use. Silver outperformed gold and key benchmark indexes with greater returns in November due to a trend reversal in Chinese consumption mood."
On the MCX, the December 2023 gold future contract is quoted at roughly 62,600 per 10 gm, while the December silver future contract is quoted at around 75,800 per kg. The current international gold pricing is $2,044 per ounce, while the current spot silver rate is roughly $25 per ounce.
