Silver futures contract for December delivery surged by Rs 545 to trade at Rs 60,054 per kg.
Speculators enlarged positions after a rise in commodities in overseas market as a weaker dollar increased appeal for commodities as an alternative investment.
The demand for silver comes from industries and investments, as a safe haven. It is considered as precious metal as well as industrial metal.
Silver is used in many industries like manufacturing, electrical and electronics, pharmaceutical and food industry which makes the demand highly desirable for investors.
Spot silver on MCX was seen trading at Rs 57,886 per kg. Mumbai spot silver was seen trading at Rs 59,970 kg.
Prices rose after renewed hopes of another round of monetary stimulus to boost the sagging economy.
However, the demand for the metal is expected to witness a decline on account of the price rise.