Silver, which emerged as one of the strongest-performing commodities in 2025, may experience intermittent corrections in 2026 despite maintaining robust long-term fundamentals, according to Saif Mukadam from ICICI Direct. The precious metal delivered an eye-catching 140% rally in 2025, but current elevated levels may not support fresh investment opportunities.

Silver Outlook: Strong Fundamentals, Cautious Near-Term View

Mukadam highlighted that while silver's structural and fundamental outlook remains positive, the dramatic price movement has created challenging entry conditions. "Structurally or fundamentally, silver prices should move on the upside, but as prices have moved drastically, the current levels are not supportive. The risk-reward ratio is not favourable, and we could see a pullback," he explained.

The analyst identified several key drivers that could influence silver's trajectory in 2026:

• Policy risks: Silver's inclusion in the U.S. critical minerals list raises concerns about potential tariff impositions
• Industrial demand: Continued structural demand from solar PV, electronics, AI chips, and data centre cooling applications
• Supply dynamics: Ongoing supply constraints supporting price levels

Although industrial demand flattened in 2025 after several years of strong growth, Mukadam believes long-term prospects remain favourable, advising investors to use short-term pullbacks as buying opportunities.

Gold Expected to Outperform Silver in 2026

After significantly lagging silver's performance in 2025, gold is positioned for relative outperformance this year. While silver surged 140%, gold rallied approximately 60% to 65% during the same period.

Mukadam outlined several supportive fundamentals for gold:

• Central bank buying activities
• De-dollarisation trends
• Fiscal concerns globally
• Expectations of multiple U.S. Federal Reserve rate cuts in 2026
• Continued role as hedge against geopolitical uncertainties

However, similar to silver, Mukadam cautioned against immediate entry at current levels, stating that "the risk-reward ratio is not favourable" and advising investors to wait for pullbacks before accumulating gold positions.

Broader Commodities Outlook

Beyond precious metals, Mukadam provided insights on other key commodities. Crude oil prices are expected to remain under pressure in 2026 due to global supply surplus conditions, with OPEC unwinding production cuts and pumping additional oil into the market. The analyst expects the market to remain in surplus by approximately 2 million barrels per day.

Copper, which surged 40–45% in 2025, continues to benefit from supply-side constraints including mine disruptions and low-grade ore challenges. However, policy uncertainty regarding U.S. tariffs on refined copper could trigger volatility. Among base metals, aluminium stands out as the most attractive option, with the market expected to remain in deficit as Chinese capacity reaches limits and several smelters shut down.

Silver has emerged as the fastest-growing precious metal in consumer portfolios, outpacing gold's performance over the past five years. According to Deloitte's jewellery industry report, silver prices have achieved a compound annual growth rate of approximately 22%, significantly higher than gold's roughly 18% CAGR during the same period. This growth reflects not just price appreciation but a fundamental shift in consumer behavior and preferences, particularly among younger demographics.

Consumer Behavior Driving Silver's Rise

The surge in silver's popularity extends beyond mere price performance, rooted in changing consumer attitudes toward jewellery purchasing and wearing patterns. Deloitte's analysis reveals that silver is increasingly being adopted as an 'everyday metal,' contrasting with gold's traditional role as India's cultural and financial anchor.

This demographic shift represents a move toward building broader, more flexible jewellery wardrobes rather than focusing solely on high-value, occasion-specific purchases.

Recent Market Performance and Volatility

Silver's recent market performance underscores both its growth potential and inherent volatility. The metal has demonstrated significant short-term gains across multiple timeframes:

The 2025 rally saw spot silver surge past $80.00 an ounce, driven by robust industrial demand and a fifth consecutive year of supply deficits. Clean-energy applications and electronics have contributed additional demand momentum, reinforcing silver's dual role as both adornment and industrial metal.

Market Risks and Challenges

Despite strong performance, silver's volatility presents significant challenges for market participants. December 2025 witnessed sharp pullbacks after the CME raised futures margin requirements, squeezing speculative long positions. Looking ahead, Citi Research has identified potential headwinds from commodity index rebalancing scheduled between January 8-14.

Strategic Implications for Retailers

For jewellery retailers, Deloitte's report emphasizes treating silver's rise as portfolio expansion rather than gold replacement. The research suggests silver works most effectively as an entry point for new customers and a frequency driver through seasonal collections and design-led offerings.

Successful implementation requires clear trade-up pathways into higher-value categories such as studded jewellery or gold products. Organized retailers must balance design-led innovation with operational discipline, implementing tight assortment planning, lifecycle management, and pricing guardrails to avoid margin dilution during volatile market phases.

The data indicates that silver's growth trajectory represents a durable opportunity for retailers to deepen customer relationships beyond traditional wedding-focused sales, provided they maintain disciplined operational approaches while capitalizing on changing consumer preferences.