Silver shocked the market with a sudden crash, dropping about 25 per cent on Multi Commodity Exchange (MCX) and losing nearly Rs 1,00,000 per kg just a day after reaching record highs.
This unexpected turn has left investors anxious, wondering if they should hold on, take profits, or prepare for more instability.
MCX silver prices fell back to the Rs 3 lakh per kg level after briefly trading close to Rs 4 lakh earlier in the week. This marked one of the largest single-day declines the metal has ever experienced. The crash followed a steep global selloff, with spot silver in international markets dropping as much as 28 per cent to around 85 dollars per troy ounce after hitting a lifetime high of 121.60 dollars just days earlier.
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Why this sudden trigger?
The trigger came from the United States. President Donald Trump nominated Kevin Warsh as the next Federal Reserve chair. This move calmed fears about the independence of the central bank and led to a rise in the US dollar. The dollar index had its largest single-day increase since May last year, going back above the 97 mark.
A stronger dollar usually puts pressure on precious metals by making them more expensive for non-US buyers and reducing their attractiveness compared to interest-bearing assets.
The collapse of gold
The collapse of gold also added to problems for silver. After reaching record levels earlier this week, international gold prices dropped sharply, with spot gold falling nearly 9 per cent. On MCX, gold February futures fell about 12 per cent to close near Rs 1,50,440 per 10 grams. Analysts say silver often amplifies gold's shifts due to lower liquidity and more speculative trading.
What do analysts say?
As prices fell, investors hurried to secure their profits. According to a report by news agency NDTV, JM Financial Services stated in a report that silver is very difficult to interpret at current levels. The brokerage is not recommending new investments and advises those already holding silver to maintain trailing stop losses below Rs 3,00,000 per kg. They noted that while momentum could push prices up to Rs 4,20,000 to Rs 4,50,000, the risks have grown significantly after the sharp decline.
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Others suggest caution without becoming fully negative. In another report quoted by the news agency, Geojit Investments mentioned that silver remains structurally strong due to limited supplies and its increasing importance as a critical industrial metal. However, they cautioned that steep corrections are inherent to its nature.
According to analysts, the market is massively overbought and asserted that a decline in geopolitical tensions, increase in dollar strength, or an improvement in mine production could lead to a further fall in prices.
Some analysts see silver as a long-term holding position. However, they stress maintaining discipline, as well as noting that silver provides two benefits: it is used in solar, electronic and medical technologies and can act as a means of protection against inflation.
They noted that supply shortages that have persisted for the last five years may continue to exist, on average through 2026.
