Silver achieved a remarkable milestone this week, briefly overtaking Nvidia to claim the position as the world's second-largest asset by market capitalisation. The white metal's meteoric rally pushed its market value to $4.57 trillion, edging past the AI chipmaker's $4.559 trillion valuation, though prices later eased to $79 per ounce.

Market Capitalisation Rankings

The brief overtaking highlighted silver's extraordinary surge, positioning it among the world's most valuable assets. The hierarchy at the time of the milestone demonstrates the scale of silver's achievement:

Silver's ascent is particularly noteworthy as it surpassed Nvidia, widely regarded as the poster child of the artificial intelligence boom, while outperforming nearly every major asset class in 2025.

Industrial Demand Drives Silver's Rally

Silver's surge stems from its indispensable role across multiple high-growth sectors. The metal serves as a critical component in electric vehicles, solar panels, electronics, and AI data centers. Government acceleration of energy transitions and rapid expansion of data infrastructure have created robust and largely unavoidable demand patterns.

The market faces its fifth consecutive year of supply deficits, with mining output consistently lagging behind consumption levels. Above-ground inventories have fallen to near historic lows, creating additional upward pressure on prices. Lower interest rates have further enhanced the appeal of non-yielding assets like silver, with three U.S. Federal Reserve rate cuts fueling expectations for additional monetary easing in 2026.

Geopolitical and Trade Factors

A weaker dollar and various geopolitical developments have contributed to silver's haven appeal. U.S. actions in Venezuela and Nigeria have created additional flashpoints that support precious metals demand. Meanwhile, a U.S. Commerce Department probe into critical mineral imports has raised prospects of tariffs or trade restrictions on silver, injecting fresh uncertainty into already strained supply chains.

Market Structure Vulnerabilities

Unlike gold, which benefits from deep liquidity and lending pools estimated at $700 billion in London, silver lacks comparable market buffers. This structural fragility became evident during October's historic supply squeeze. While London vaults have experienced some inflows since then, shortages persist in other global markets.

In China, inventories connected to the Shanghai Futures Exchange dropped to their lowest levels since 2015. Much of the world's readily available silver now sits in New York warehouses, as traders await clarity on U.S. trade policy developments. This concentration has created what market observers describe as a global game of musical chairs, with insufficient metal available to meet widespread buyer demand.

Gold prices in India traded nearly flat on Wednesday, posting marginal gains across purity levels, even as global bullion prices declined on profit-booking ahead of key US economic data. The domestic market showed resilience despite international headwinds as traders shifted focus from geopolitical tensions to upcoming US labor market indicators.

Indian Domestic Price Movement

Domestic gold prices demonstrated stability with minimal upward movement across all purity levels. The marginal gains reflect steady local demand despite global price pressures.

Silver prices edged higher in the domestic market, continuing their positive momentum. Silver gained ₹0.10 to ₹253.10 per gram, while prices on a kilogram basis rose by ₹100 to ₹2.53 lakh, maintaining the white metal's strong performance trajectory.

Global Market Dynamics and Profit-Booking

International gold prices slipped as investors booked profits after a recent rise, with spot gold falling 0.7% to $4,466.19 per ounce. US gold futures for February delivery declined 0.4% to $4,477.30 an ounce, retreating from earlier climbs to more than one-week highs.

The dollar traded near a two-week high, pressuring dollar-denominated commodities ahead of a series of US labor market indicators, including non-farm payrolls, JOLTS and ADP private payrolls data. This currency strength continues to create headwinds for precious metals in international markets.

Market Outlook and Technical Levels

According to Rahul Kalantri, Vice President – Commodities at Mehta Equities Ltd, gold and silver had recently advanced on strong safe-haven demand amid heightened geopolitical tensions, with markets now awaiting US payroll data for further direction. The focus has clearly shifted from geopolitical developments to economic fundamentals that could influence Federal Reserve policy decisions.

Investors continue to factor in expectations of at least two US rate cuts this year, maintaining the fundamental support for precious metals despite current volatility. The three successive rate cuts implemented previously served as a significant tailwind for precious metals, which benefit from lower interest rate environments due to their non-yielding nature.

Federal Reserve Policy Impact

The monetary policy backdrop continues to influence precious metals trading, with market participants weighing the implications of potential rate cuts on commodity valuations. Recent manufacturing data came in weaker than expected, reinforcing expectations for potential interest rate cuts and supporting the fundamental case for gold and silver investments despite current price volatility.

Silver has maintained its outperformance relative to gold, with the white metal continuing to benefit from multiple supportive factors including supply constraints and strong retail investor appetite, particularly from Asian markets. The current price action reflects ongoing institutional and retail interest in precious metals as portfolio diversification tools.