Silver prices have surged to unprecedented levels, with spot prices touching an all-time high of $82.95 per ounce internationally, marking a remarkable 170% increase from $29.00 per ounce at the start of 2025. The rally has been driven by China's upcoming export restrictions, strong industrial demand, and mounting supply concerns across global markets.

Record-Breaking Price Performance

Silver futures on the Multi Commodity Exchange (MCX) for March 2026 delivery jumped 3.86% to a lifetime high of ₹2.49 lakh per kilogram, while domestic prices in Indian cities reached new record highs of ₹2.50 lakh per kilogram. Gold futures on MCX for February 2026 delivery rose 0.16% to trade at ₹1.40 lakh per 10 grams, maintaining momentum near all-time highs.

Internationally, gold remained close to all-time highs at $4,584.00 per ounce on Comex, supported by expectations of Federal Reserve rate cuts and a weaker US dollar hovering near three-month lows.

China's Export Restrictions Fuel Supply Concerns

China's decision to impose silver export restrictions starting January 1, 2026, has created significant market disruption. Under the new rules, companies must obtain government licenses for silver exports, with a quota system based on export history between 2022 and 2024. Chinese authorities stated the move aims to enhance resource management and environmental protection.

Tesla CEO Elon Musk expressed concerns about the restrictions, stating "This is not good. Silver is needed in many industrial processes," highlighting the metal's critical role in modern manufacturing.

Industrial Demand and Supply Dynamics

Silver's exceptional performance reflects strong industrial demand across key sectors including solar panels, electric vehicles, data centers, and power generation. The metal's crucial role in these growing industries, combined with falling global inventories, has created structural supply-demand imbalances.

Rahul Kalantri, Vice President – Commodities at Mehta Equities, noted that China's proposed silver export restrictions have heightened supply concerns and contributed to silver's recent outperformance against gold. Growing confidence in Federal Reserve policy easing, geopolitical tensions, and supply risks continue supporting precious metal prices.

Market Outlook and Expert Projections

Pranav Mer, Vice President at JM Financial Services, expects gold could move towards $5,000.00-5,200.00 per ounce globally and ₹1.50-1.55 lakh per 10 grams on MCX in 2026. Prathamesh Mallya from Angel One anticipates gold prices testing ₹1.60 lakh per 10 grams in the first half of 2026.

The convergence of multiple factors – ongoing supply-demand deficits, China's export curbs, strong industrial demand, and expectations of monetary policy easing – suggests continued support for precious metals. Markets await key cues from upcoming FOMC minutes for clarity on the pace and timing of future rate cuts, which could further influence bullion trajectories.

UBS has significantly upgraded its gold price outlook, setting a new target of $5,000 per ounce for the first three quarters of 2026. The investment bank announced this revised forecast on Monday, representing a substantial increase from its earlier projection of $4,300 per ounce by end-2026.

Revised Price Targets

The bank's updated gold price projections reflect a more bullish stance on the precious metal's performance over the next few years.

Key Market Drivers

UBS expects gold demand to rise steadily through 2026, supported by several fundamental factors:

• Lower real yields, which typically make non-yielding assets like gold more attractive to investors
• Persistent global economic concerns, supporting safe-haven demand for the precious metal

Policy Uncertainty Impact

U.S. domestic policy uncertainty emerges as a significant factor in UBS's analysis. The bank specifically highlights concerns related to:

• Midterm elections
• Rising fiscal stress

These political and economic uncertainties are expected to drive investors toward gold as a hedge against market volatility.

Risk Scenario Assessment

UBS has also revised its upside price target for gold under stressed market conditions. In scenarios where political or financial risks increase substantially, the bank projects gold prices could climb to $5,400 per ounce, up from its previous crisis scenario target of $4,900 per ounce. This adjustment reflects the bank's assessment of heightened potential for market disruption and the corresponding flight-to-quality dynamics that typically benefit gold.