Silver futures on the Multi Commodity Exchange (MCX) reached a historic milestone, rising 5.5% to ₹3.03 lakh per kg, driven by international market gains amid escalating tariff tensions between the US and NATO allies over Greenland's sovereignty. However, the domestic physical silver market presents a contrasting picture, with significant discounts reflecting cooling demand in India.

Physical Market Shows Major Discount

The physical silver market in India is currently trading at a substantial discount to international prices. According to Surendra Mehta, national secretary of the India Bullion and Jewellers Association (IBJA), there is a ₹10,000 per kg discount prevailing in the physical market.

The IBJA's gold rates are officially used by the Reserve Bank of India (RBI) to redeem sovereign gold bonds, lending credibility to their market assessments.

Import Data Reflects Demand Trends

India's silver import and demand statistics through November 2025 highlight the market dynamics. Independent precious metals research consultancy Metals Focus reported that India imported 6,785 tonnes of silver against total demand of 7,040 tonnes during the same period.

Chirag Sheth, principal consultant (South Asia) at Metals Focus, confirmed the demand slowdown, stating that the historic price rally has resulted in reduced domestic appetite for the precious metal. Despite this near-term weakness, Sheth maintained a "bullish" outlook for silver, citing ongoing uncertainty around global tariffs.

ETF Surge Contrasts Physical Market

While physical demand has cooled, silver exchange-traded funds (ETFs) have witnessed remarkable growth. Domestic silver prices, as tracked by the Nippon India Silver ETF, rose 5.66% to ₹284.70 per gram, delivering impressive returns across different timeframes.

Satish Dondapati, fund manager at Kotak Mutual Fund, highlighted the dramatic shift in investor preferences. Silver ETF assets under management surged from ₹15,339.21 crore as of March 31, 2025, to ₹72,907.44 crore by end-December 2025.

Global Factors Drive Market Sentiment

The current silver rally stems from international developments, particularly tariff tensions affecting global trade dynamics. Market experts suggest that the "tariff wars" have created dislocations in silver markets worldwide. According to industry analysis, unless clarity emerges on trade policies, tightness in the metal supply is expected to continue globally, maintaining upbeat market sentiment.

The contrast between record-high futures prices and discounted physical market rates reflects the complex dynamics affecting India's silver market, where international price movements clash with local demand patterns.

Gold prices experienced a remarkable surge in India on Monday, with significant gains recorded across all categories as both domestic and international markets reflected strong bullish sentiment driven by technical strength and global uncertainty.

Current Gold Rates in India

The domestic gold market witnessed substantial price increases across different purities on Monday. The following table shows the current rates and overnight changes:

The 24-karat gold for 100 grams jumped by ₹19,100.00 overnight, rising from ₹14,37,800.00 to ₹14,56,900.00. Similarly, 22-karat gold for 100 grams increased by ₹17,500.00 from ₹13,18,000.00 to ₹13,35,500.00, while 18-karat gold for 100 grams gained ₹14,300.00 from ₹10,78,400.00 to ₹10,92,700.00.

MCX Gold Technical Analysis

According to Abhishek M Pelu, Research Analyst at Way2Wealth Brokers, MCX Gold maintains its uptrend despite recent negative price action in the last two sessions. The metal continues trading above the 10 and 20 DEMA lines, displaying a bullish higher-high and higher-low structure that indicates positive trend and strong momentum.

Traders can consider buying MCX Gold for the specified targets, with sustained weakness below ₹1,40,250.00 warranting a review of the current bullish outlook.

Spot Gold Market Outlook

ICICI Securities research analysts indicate that spot gold is likely to trade with positive bias and rise further towards the $2,700.00 level, supported by dollar weakness. The safe-haven demand may increase due to concerns over potential trade tensions between the US and Europe.

Trump announced plans to impose additional 10% import levies from February 1 on goods from eight European nations, with rates potentially rising to 25% on June 1 if no agreement is reached, as part of efforts related to Greenland acquisition discussions. France has proposed responding to these threats with various economic countermeasures.

Supporting Factors

Several factors continue supporting gold prices globally:

• Political instability in Venezuela
• Ongoing geopolitical tensions in the Middle East
• Concerns over Federal Reserve independence
• Weakening US dollar
• Increased safe-haven demand amid trade uncertainty

The combination of technical strength, global uncertainty, and falling US dollar continues to bolster bullish sentiment in both domestic and international gold markets, with the metal maintaining its position above key short-term moving averages despite occasional profit-booking activities.