If you’ve been watching the commodities market lately, you’ve probably noticed things have been anything but quiet. The past week was particularly positive for bullion, but the real star of the show has been silver. Its price absolutely roared, eclipsing gold’s gains and leaving many investors wondering what’s fueling this incredible run. It’s a fascinating story of supply shortages, central bank moves, and massive anticipation swirling around the upcoming US Fed meeting.
Key Highlights
- ✓ Silver prices have roared from below $50 to around $58. 85 per troy ounce due to a persistent global shortage.
- ✓ The Gold/Silver ratio has dropped to an annual low of just over 73, highlighting silver's recent outperformance. Research findings show that
- ✓ Central bank demand for gold remains robust, with 53 tons purchased in October, a 36% month-on-month increase.
- ✓ Traders are pricing in an 87-89% chance of a US Fed rate cut in December, fueling bullish sentiment for precious metals.
- ✓ In India, a weakening rupee, which hit a record low of 90. 14 against the US dollar, is making gold and silver even more expensive for domestic investors.
The Silver Squeeze: A Perfect Storm of Shortages
So, what’s the big deal with silver. Well, the price jump from below $50 to around $58. 85 per troy ounce wasn't just a random fluke. It’s being driven by a very real and persistent shortage of the white metal in global markets. The supply tightness is creating a powerful upward pressure on prices, and the data paints a pretty stark picture of what’s happening behind the scenes.
A huge part of this story is unfolding in China. Silver inventories registered on the Shanghai Futures Exchange recently plummeted to their lowest level in a staggering 10 years. It’s a similar story on the Shanghai Gold Exchange, where they hit a nine-year low. It's important to highlight This was triggered by China's record-breaking exports of 660 tons in October, which apparently made their way to London where shortages were already popping up.
It’s not just physical metal moving around, either. The Silver ETFs tracked by Bloomberg saw inflows of a good 290 tons last week alone. When that much silver is bought up by funds, it withdraws supply from the market and adds even more fuel to the fire. Adding another layer of complexity, silver was recently added to the US Geological Survey list of critical minerals, which has sparked talk of potential tariffs. This fear is making some traders hesitant to ship metal out of the US, with 75 million ounces already having left the vaults of the Comex futures exchange since early October. Industry experts suggest that This is keeping sentiment volatile and prices on edge.
Gold’s Steady Glow: The Central Bank Factor
While silver has been grabbing the headlines with its explosive moves, don’t sleep on gold. The yellow metal is trading with a decidedly positive bias, and there are some very powerful forces providing a solid floor under its price. One of the biggest factors is the continued, robust demand from central banks around the world.
According to data from the World Gold Council, central banks collectively bought 53 tons of gold in October. That’s a massive 36% increase month-on-month and marks the largest monthly net demand since the start of 2025. This isn't a widespread buying spree, though; the buying has been concentrated among a small number of central banks. The National Bank of Poland, for example, became active again during the month, leading the charge and continuing a strong trend seen throughout the year.
This steady, institutional buying provides a strong undercurrent of support for gold. While it might not have the same volatility as silver right now, this foundational demand is a key reason why the bias for the month remains positive, even with some expected choppiness ahead of the big Fed meeting on December 10th.
All Eyes on the Fed: The Rate Cut Catalyst
You can't talk about gold and silver right now without talking about the U. S. Federal Reserve. Expectations of a rate cut have been the primary driver for the whole bullion complex. Recent economic data from the U. S. has only solidified this belief. For instance, data showed that US manufacturing contracted for the ninth straight month in November, a clear sign of a modest economic slowdown.
Because of this, traders are now pricing in a near-certainty of a rate cut. According to the CME’s FedWatch tool, there’s an 87% to 89% chance of a December rate cut. This narrative has been reinforced by dovish comments from Fed officials themselves, including Christopher Waller and John Williams. Adding to this, White House economic adviser Kevin Hassett has reportedly emerged as a frontrunner for the new Fed chairman position, and like President Trump, he favors lower interest rates. This combination of factors has sent US Treasury yields slightly lower and the dollar index down 0. 72% last week, both of which are typically bullish for gold.
The View from India: Rupee's Fall Fuels the Fire
For investors in India, there’s another critical piece of the puzzle: the Indian rupee. The recent surge in precious metal prices on the Multi Commodity Exchange of India (MCX) isn't just about what's happening globally. It's also being significantly amplified by the sharp fall in the local currency.
The rupee just hit a lifetime low of 90. 14 against the US dollar, and it has depreciated more than 5% so far in 2025. It's worth noting that When the rupee weakens, it makes imported goods—including gold and silver—more expensive for domestic buyers. This created a double whammy effect, pushing local prices even higher. We saw this play out clearly when the MCX gold rate opened 0. 6% higher at ₹1,30,550 per 10 grams, and silver jumped 1. 21% to open at ₹1,83,799 per kg.
Experts are watching these levels closely. Ajay Kedia of Kedia Advisory notes that the trend remains positive, with MCX gold having support around ₹1,28,650. Meanwhile, Ponmudi R, CEO of Enrich Money, says that MCX silver remains "exceptionally bullish," with a sustained breakout above ₹1,84,000 potentially extending the rally toward ₹1,86,000 – ₹1,88,000. It’s a dynamic situation where both global strength and the weak rupee are feeding into a strong bullish sentiment.
Conclusion
The bottom line is that the bullion market is buzzing with activity for very clear reasons. Silver's spectacular rally is rooted in a fundamental supply and demand imbalance, with global shortages creating intense upward pressure. At the same time, gold is enjoying steady, unwavering support from central bank buying, cementing its status as a reliable store of value.
Overlaying all of this is the massive anticipation of a US Federal Reserve rate cut, which is acting as a powerful catalyst for both metals. As we head towards the crucial Fed meeting, the bias remains positive, but investors should be prepared for continued volatility. It’s a fascinating time for precious metals, with a powerful confluence of factors driving the market forward.
