Silver price: Shares of Hindustan Zinc declined 4% to ₹531.1 in Thursday’s trade, bucking the broader market rally as silver prices extended their steep decline. The weakness in the stock comes amid a sharp fall in precious metal prices, driven by a stronger US dollar, rising bond yields, expectations of higher US interest rates and easing geopolitical tensions in the Middle East.
The broader Indian market traded higher during the session, but Hindustan Zinc remained under pressure as investors reacted to continued weakness in silver, one of the company’s key revenue-generating metals.
It has been a bruising week for silver. The white metal has plunged as much as 14%, extending losses for a third consecutive session on Thursday, just a day after falling to a seven-month low.
Reflecting the decline in silver prices, Hindustan Zinc shares have fallen 9% this week and nearly 18% over the past month. Silver is now trading at less than half of its all-time high of $121 an ounce touched in January.
Why is silver falling?
One of the biggest factors weighing on silver has been mounting expectations that the US Federal Reserve could raise interest rates later this year.
The US central bank kept interest rates unchanged at its latest policy meeting, but more policymakers projected a rate hike before the end of the year as inflation continues to remain above the Fed’s 2% target. In the first Federal Open Market Committee (FOMC) meeting under Chairman Kevin Warsh, the central bank acknowledged that inflation remained elevated relative to its target, citing supply shocks that had pushed up prices in sectors including energy.
The prospect of higher borrowing costs has strengthened the US dollar, making dollar-denominated commodities such as silver more expensive for overseas buyers and weighing on demand.
Investors are also awaiting the release of the US Personal Consumption Expenditures (PCE) data, the Federal Reserve’s preferred inflation gauge, due on Thursday for further cues on the future path of monetary policy.
Another major factor behind silver’s decline has been easing geopolitical tensions. Prices have remained under pressure after the United States and Iran reached a 60-day agreement aimed at addressing key issues, including Tehran’s nuclear programme. The agreement has reduced fears of a broader conflict in the Middle East, diminishing the safe-haven demand that had supported precious metals in recent weeks.
Although geopolitical uncertainty typically benefits precious metals, analysts believe macroeconomic factors are currently having a greater influence on silver prices than geopolitical developments.
Rising bond yields have also intensified selling pressure. Since silver does not generate any interest or income, higher government bond yields improve the appeal of fixed-income investments. Higher yields also tend to strengthen the US dollar, encouraging investors to move money away from non-yielding assets such as silver and gold into interest-bearing securities.
Silver outlook
Analysts expect silver to remain volatile in the near term as markets weigh the impact of a stronger US dollar, elevated bond yields and expectations of tighter monetary policy. While downside risks persist, some believe oversold conditions could trigger intermittent short-covering rallies even as the broader trend remains weak.
Renisha Chainani, Head of Research at Augmont, believes silver remains caught between multiple macroeconomic headwinds, including a broad risk-off sentiment, expectations of tighter US monetary policy and the unwinding of yen carry trades.
“Silver is extending their losing streak even as a temporary US-Iran ceasefire offers little relief, caught between three simultaneous headwinds. A sharp selloff in AI stocks has triggered a broad risk-off wave that is spilling into precious metals. Separately, the Federal Reserve’s increasingly hawkish tone has pushed the probability of a December 2026 rate hike to 86%, lifting the Dollar Index above 101 and pressing down on gold.”
Chainani noted that the unwinding of yen carry trades, as USDJPY slides to a 40-year low on rising Japanese interest rates, is generating ripple-effect selling across safe-haven assets. She observed that silver has broken below the $60 (around ₹2,20,000) level and slipped to $55.50 (around ₹2,10,000). According to her, a continuation of bearish momentum with a breach of the previous day’s low could expose the next support at $50 (around ₹2,00,000), while oversold conditions could pave the way for a short-covering bounce towards $62 (around ₹2,28,000) and $67 (around ₹2,38,000).
Tata Mutual Fund, however, believes silver’s long-term investment case remains intact despite the recent correction, although it expects near-term consolidation.
“Silver may continue to get dual advantage of precious and industrial metal. Silver for short term may witness some consolidation after recent decline. The deteriorated global economic outlook may limit the demand for silver over medium term. The decline in solar installations and large liquidation of the long positions has eased the supply tightness in global market.”
The fund house said the deteriorating global economic outlook may limit silver demand over the medium term. It added that the decline in solar installations and the liquidation of long positions have eased supply tightness in the global market. While describing silver as a developing long-term growth story, Tata Mutual Fund said its long-term trend remains highly dependent on a broad recovery in industrial demand and recommended a staggered investment approach for medium- to long-term investors, given the commodity’s volatile nature.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
