Demand for silver bars has weakened sharply after prices surged to record levels this month, even as bullion dealers rolled out steep discounts to attract buyers. According to the India Bullion & Jewellers Association (IBJA), silver demand in January has dropped around 20% year-on-year, reflecting buyer hesitation amid extreme price volatility.

Silver prices jumped nearly 24% in the last fortnight, rising from Rs.2.29 lakh per kg on January 1 to a record Rs.2.85 lakh per kg, before easing slightly to Rs.2.82 lakh per kg on Friday. The muted demand comes despite dealers offering discounts of up to Rs.8,000 per kg. Industry experts say continued price swings are discouraging physical purchases.

Bullion traders in Mumbai’s Zaveri Bazaar noted that jewellers have also slowed their silver buying, uncertain about consumer off-take at current price levels. India typically consumes 6,000–7,000 tonnes of silver annually, but recent volatility has disrupted purchasing patterns. Market participants attribute the fluctuations to geopolitical tensions, global profit-booking, and uncertainty over US trade policy.

Prices briefly dipped earlier in the month due to profit-taking before rebounding again. Analysts point out that silver inventories have shifted from London to New York vaults, tightening availability in the market and pushing prices higher, even as industrial demand remains strong.

Adding to the uncertainty, Indian buyers are waiting for clarity on US policy decisions and the upcoming Union Budget, with expectations that the government may reduce the current 6% import duty on silver to ease prices. While some analysts believe short-term corrections are possible due to profit-booking, others remain optimistic about silver’s longer-term outlook, citing strong macro fundamentals and sustained industrial demand.