Silver Price Surges to ₹2.35 Lakh/Kg Following Decline in US Dollar Amid Federal Reserve Rate Decision

Precious Metal Prices Stage Recovery as Dollar Weakens

In a significant turnaround, silver prices in India rose by around 1% to ₹2,35,102 per kg on Thursday, after hitting a one-month low in the previous session. This recovery was largely driven by a softer U.S. dollar, which provided support to precious metals. However, concerns about persistent inflation, fueled by elevated crude oil prices, continued to weigh on the market.

Despite the challenges, MCX silver prices managed to advance 1%, while MCX gold prices remained flat, up 0.3% at ₹1,49,526 per 10 grams. Spot silver also rebounded, rising 1% to $72.18 per ounce, while other precious metals such as platinum and palladium saw gains of 1.7% and 0.9%, respectively. Gold prices followed suit, with spot prices up 0.6% at $4,566.73 per ounce as of 0105 GMT.

Read also: Gold and Silver Prices Decline Amid Strengthening Dollar and Inflation Concerns

The decline in the U.S. dollar played a key role in supporting bullion prices, making dollar-denominated metals cheaper for holders of other currencies and thereby boosting demand. However, the broader macro backdrop remains complex, with Brent crude oil hovering above $119 per barrel, near its highest levels since June 2022.

The surge in oil prices has been driven by escalating geopolitical tensions, particularly stalled negotiations between the United States and Iran. Concerns over prolonged supply disruptions in the Middle East have added upward pressure to crude markets. U.S. President Donald Trump indicated that the United States would continue a naval blockade of Iranian ports in an effort to curb Tehran's oil exports and push it back to negotiations.

From an investor standpoint, higher oil prices translate into renewed inflation risks, complicating the outlook for interest rates. The U.S. Federal Reserve recently held interest rates steady, but the decision reflected growing internal divisions, with three officials dissenting against the current policy stance. This signals uncertainty over the future path of rate cuts, a key driver for precious metals.

Adding another layer of uncertainty, Kevin Warsh, seen as Trump's preferred candidate to lead the Fed, cleared an important procedural step, potentially paving the way for him to succeed Jerome Powell next month. For investors, the near-term outlook for silver remains a balancing act between supportive factors like dollar weakness and safe-haven demand, and headwinds such as elevated oil prices and a potentially prolonged high-interest-rate environment.

Read also: Gold and Silver Prices in India: A Review of Current Rates Across Major Cities