Silver breaches Rs 2 lakh/kg as gold rallies on weak dollar, rate cut hopes

Silver crossed into uncharted territory on Friday, breaching the Rs 2 lakh per kilogram mark in futures trading for the first time in history. On the Multi-Commodity Exchange, March delivery contracts climbed Rs 1,420—a gain of 0.71 percent—to settle at Rs 2,00,362 per kg. This was the fourth consecutive day the white metal had advanced, and internationally, the momentum was just as sharp: Comex silver futures scaled a fresh peak of $64.74 per ounce, a level that represented a 111 percent surge since the start of 2025.

The rally was not happening in isolation. Gold, too, was climbing steadily, reaching its highest point in seven weeks. Spot gold rose 0.7 percent to $4,311.73 per ounce by mid-morning GMT—the strongest level since October 21—and was on pace for a 2.7 percent weekly gain. US gold futures mirrored the move, gaining 0.7 percent to $4,343.50. The synchronized strength in both metals pointed to a shared set of drivers: a weakening US dollar, expectations that the Federal Reserve would cut interest rates further, and the kind of safe-haven buying that typically emerges when geopolitical tensions rise.

The dollar itself had become a drag on its own value. The currency was hovering near a two-month low and tracking toward its third consecutive weekly decline, making precious metals cheaper for buyers anywhere outside the United States. This mattered enormously for global demand. Meanwhile, the Federal Reserve had just trimmed rates by 25 basis points for the third time in 2025, a move that raised concerns about currency debasement even as inflation risks were tilting higher. US jobless claims had spiked by the largest amount in nearly four and a half years, reversing the previous week's decline and adding to the sense that economic conditions were softening.

But there was another force at work beneath the surface, one that suggested the rally might have legs. According to Anindya Banerjee, head of currency and commodities at Kotak Securities, silver was benefiting from what traders call a physical squeeze. Asian buyers were aggressively demanding actual metal for delivery, while Western sellers were struggling to meet their derivative-linked obligations. The initial wave of roughly $40 billion in US Treasury bill purchases beginning in mid-December was being interpreted by markets as a form of quasi-quantitative easing—a signal that monetary accommodation might be returning.

The numbers told the story of a metal in motion. Silver had gained more than 23 percent in a single month and was up 111 percent for the year. Spot silver itself rose 0.5 percent to $63.87 per ounce on Friday, after touching a record high of $64.32, and was headed for a 9.5 percent weekly gain. Gold, too, was participating in the broader momentum, though with less dramatic percentage moves.

Not everywhere was demand equally robust. In India, gold discounts were widening as buyers held back despite the wedding season—traditionally the strongest period for purchases. China, too, was seeing demand dented by the high spot prices now prevailing globally. But these regional softnesses seemed to matter less than the structural forces driving prices higher: a weaker dollar, rate cut expectations, geopolitical risk, and a physical market where buyers in Asia were willing to pay up for metal they could hold in hand.