Why silver outshined Nifty 50, gold in November 2023 — explained

Despite stock market rally and Nifty 50 reclaiming the psychological 20,000 levels, silver price rally outshined 50-stock index in the month of November. In November till date, silver price has rallied to the tune of 6 per cent in domestic market whereas in international market, the precious white metal has risen more than 9 per cent, a return which is much higher than public providend fund (PPF) or bank fixed deposit (FD) returns.

Compared to silver price rally, Nifty 50 index manged to register near 5.30 per cent MTD (month-to-date) rally while gold price appreciated to the tune of around 3 per cent only. 

According to commodity market experts, depreciation in US dollar rate and 10-year US bond yield descending close to 4 per cent from 16-year higher levels of 5 per cent helped gold and silver price rally in recent sessions. However, positive sentiments in Chinese consumption led to more industrial demand for the precious white metal, which helped silver in outshining the key benchmark index and gold in November 2023.

Speaking on silver price rally, market expert Sugandha Sachdeva said, "Silver has been shining bright, and registered gains of around 5.87% this month and around 9.35% in the international markets, while outperforming the benchmark index Nifty 50, which has gained by close to 5.33%. The decline in US treasury yields and a sharp corrective move seen in the dollar index have been the key catalysts that have helped the white metal gain strong ground. Finding a wall of supply at the 107.50 mark, the dollar index has drifted lower by around 3.60% for the month. As inflationary pressures ease, there is a growing speculation that the US central bank has concluded its monetary tightening program, and might initiate rate cuts by mid-next year. This dovish tilt by the Fed has caused a softening of the greenback and rekindled interest in the white metal."

On why silver outshined Nifty 50 index, Sugandha said, 'After a consolidation period, silver established a key base in the $21-20.50 per ounce zone before experiencing an upward surge. Additionally, geopolitical tensions, such as the conflict between Israel and Hamas, have increased interest in the safety of both gold and silver. Beyond its role as a precious metal, silver serves as an industrial metal, and the rising demand across various industries like 5G technologies, solar panels, and electric vehicles is reflected in the substantial price surge. Strong festive demand from India and China has further contributed to the recent buoyancy in prices. If prices can sustainably breach the longstanding hurdle of $26 per ounce, it could pave the way for a move toward $29 per ounce by early next year."

Additional trigger for silver price rally

Highlighting the reason that enabled silver in outshining gold and key benchmark indices of the Indian stock market, Anuj Gupta, Head — Commodity & Currency at HDFC Securities said, "Triggers that worked for gold have worked for silver price rally as well. But, there was an additional trigger for silver price rally called industrial use. Due to trend reversal in Chinese consumption sentiments, silver outshined gold and key benchmark indices with higher returns in the month of November."

On MCX, December 2023 future contract of gold is quoting around ₹62,600 per 10 gm whereas silver future contract for December expiry is quoting around ₹75,800 per kg levels. In international market, gold rate today is $2,044 perm ounce while silver rate today in spot market is around $25 per ounce.

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