“The demand spike during Dhanteras shows a significant shift in consumer preference for silver,” said a market analyst.
As gold prices rise, many Indian consumers are turning to silver as an affordable investment alternative. This trend is driven not only by affordability, but also by the increased use of silver in industrial applications, especially in electric vehicles (EVs), further increasing demand.
US economic data and a strong dollar put pressure on the silver price
Despite seasonal demand, silver faces headwinds from US economic indicators. The strong US dollar, supported by rising government bond yields, makes silver less attractive to international buyers.
The recent personal consumption expenditure (PCE) price index, a key measure of inflation, rose 2.1% year-on-year in September, down slightly from 2.2% in August. Core PCE, excluding food and energy, rose 2.7%, beating the market estimate of 2.6%.
Additionally, initial unemployment claims for the week ending October 26 fell to 216,000, which beat expectations of 230,000 and indicates a robust labor market.
These factors support the likelihood of a 25 basis point rate cut by the Federal Reserve in November, which could shift monetary policy toward an accommodative stance. If the Fed cuts rates, it could weaken the dollar, potentially boosting silver prices.