After an intense surge during India’s festive season, silver demand has softened sharply, leading to a steep fall in silver premiums across domestic markets. Bullion dealers say buyers are now stepping back as prices retreat from record highs, prompting a pause in purchases after two weeks of heavy buying linked to Dhanteras and Diwali celebrations.

Silver Premiums Fall After Festive Boom

India, the world’s largest consumer of silver, saw premiums soar as high as 10% above official domestic prices earlier this month. Strong retail and investment demand, coupled with tight supplies, even forced some physically-backed exchange-traded funds (ETFs) to temporarily halt new subscriptions.

However, with the festive season rush ending, the market has cooled.

“The rush to buy silver is over. Demand has slowed, and premiums have returned to normal levels,” said Chirag Thakkar, Chief Executive Officer of Amrapali Group Gujarat, one of the country’s leading silver importers.

Bullion dealers now report that silver premiums have dropped to 25–40 cents per ounce, compared with over $5 earlier in October. The shift reflects waning enthusiasm among buyers following a period of record-high silver prices.

Cautious Buyers Wait for Price Stability

During Dhanteras and Diwali, Indians traditionally buy precious metals for good fortune, making the two festivals among the busiest periods for gold and silver purchases. Investors were eager to stock up on silver earlier this month, paying inflated prices to secure physical metal amid a supply squeeze.

Now, sentiment has shifted.

“After the price correction, investors are waiting for stability before buying again,” said a Mumbai-based bullion dealer with a private bank.

Domestic silver prices have fallen to ₹147,000 ($1,672) per kilogram, down from a record high of ₹170,415 reached earlier this month. Despite the recent dip, silver prices are still up nearly 68% year-to-date, making it one of the best-performing commodities in 2025.

ETFs and Imports Surge Amid Record Rally

The strong price rally in silver earlier this year triggered massive inflows into silver ETFs, which recorded an all-time high investment of ₹53.42 billion in September 2025. India’s silver imports also more than doubled from August levels, reaching 1,012 metric tons in September.

In early October, demand was so strong that ETFs and fund managers struggled to procure physical silver due to local shortages. Those supply constraints have now eased, dealers say, as both imports and inventory availability have normalized.

However, inflows into silver ETFs have slowed significantly in recent days as prices corrected and investors reassessed their positions.

Global Impact: Silver Lease Rates and Market Sentiment

The surge in Indian demand earlier this month even had ripple effects on global markets, temporarily pushing up silver lease rates — the cost of borrowing physical silver in London’s bullion market.

Now, as Indian buyers pause and premiums return to more typical levels, analysts expect global silver market volatility to ease in the short term.

“India remains the largest single driver of global silver demand, so its buying patterns can significantly influence short-term price movements,” said a Mumbai-based commodity strategist.

Outlook: Cautious Optimism for Year-End

With the festive season behind them, investors and retailers are adopting a wait-and-watch approach. Analysts believe that if prices stabilize near current levels, industrial demand and investment inflows could pick up again before year-end.

Still, the recent correction may offer relief to manufacturers, jewelers, and investors who were previously priced out of the market during the festive rush.