High silver prices threaten Lucknow’s famed bridal nagra craft | Longform
War-Driven Price Increases Impact Precious Metals Market
Prices for precious metals have seen significant increases since Russia’s invasion of Ukraine in early 2022, according to economists. Analysts indicate that prices surged further following recent U.S. and Israeli military actions in Iran.
In 2023, silver prices in India fluctuated between 70,000 rupees ($725) and 80,000 rupees ($830) per kilogram. By 2024, these prices rose to approximately 98,000 rupees ($985). However, during the ongoing conflict with Iran, silver prices briefly reached as high as 450,000 rupees ($4,670) per kilogram before softening after a ceasefire. Currently, prices remain elevated at around 250,000 rupees ($2,600) per kilogram—more than three times their levels from a few years ago.
Dr. Salahuddin Ayyub, an economist with India’s Ministry of Commerce and Industry, noted that geopolitical tensions have introduced unprecedented volatility into global commodity markets. He explained that when stock markets become unstable, investors typically shift their funds into more secure assets, such as gold and silver, leading to increased demand and higher prices.
The impact of rising prices has been particularly acute in India, where gold and silver play significant roles in weddings, cultural traditions, and family savings. As prices continue to climb, many consumers are opting for lower-cost alternatives like artificial jewelry.
Ayyub cautioned that while consumers may find substitutes, those who depend on the precious metals industry—such as artisans, silversmiths, jewelry store owners, and traditional craftsmen—face limited options. “The impact extends well beyond consumers,” he said. “Entire communities reliant on these metals are now confronting reduced demand and heightened economic uncertainty.”
The surge in demand for imported precious metals has prompted government interventions to protect foreign exchange reserves. Ayyub highlighted that India significantly relies on silver imports, and a sharp rise in demand could strain reserves, leading the government to impose tariffs and other restrictions to manage import levels.
“India’s heavy reliance on imported silver means that a sudden spike in imports puts pressure on foreign exchange reserves,” Ayyub explained. “As tariffs rise, the total cost of silver increases, which is why prices in India currently exceed global rates.”
As of now, the global price for silver stands at $2,100 (201,000 rupees) per kilogram, but in India, prices are over 20% higher due to substantial government import duties and rigorous licensing requirements that hinder supply. India imports more than 80% of its domestic silver demand, accounting for over 20% of the global trade in refined silver.
In May, the Indian government more than doubled its effective import taxes on gold and silver, resulting in an 87% decline in silver imports that month. Imports fell to just $75.6 million, a sharp decrease from $566.2 million the previous year, marking the lowest level in more than three years.
Now, high silver prices are forcing tough choices for brides in Lucknow, impacting their wedding plans and financial decisions.
