Read Business Desk. Silver shocked the market with a massive fall in a single day, falling almost 25 per cent on MCX, losing almost Rs 1,00,000 per kg just a day after hitting a record high. Investors, troubled by this reversal, are now in a dilemma whether to hold on, book profits or be prepared for more fluctuations.
MCX silver prices, after trading near Rs 4 lakh earlier this week, fell again towards the Rs 3 lakh zone per kg, which is one of the biggest one-day falls for the metal so far. The fall followed a massive selloff globally, with spot silver falling 28 per cent in international markets to around $85 per troy ounce, compared to an all-time high of $121.60 a few days ago.
What’s wrong with silver?
The reason for this came from the United States. President Donald Trump’s nomination of Kevin Wersh as the next Federal Reserve chairman eased fears over central bank independence, and the US dollar gained. The dollar index posted its biggest one-day jump since May last year, rising above the 97 mark. A stronger dollar generally puts pressure on precious metals, as it makes them more expensive for non-US buyers and reduces their appeal compared to interest-bearing assets.
Gold’s own decline further increased silver’s troubles. After hitting record highs earlier this week, international gold prices fell sharply, with spot gold falling nearly 9 percent. On MCX, February gold futures fell by almost 12 per cent to close at Rs 1,50,440 per 10 grams. Analysts say that due to low liquidity and high speculative participation, silver often outperforms gold.
As soon as prices fell, investors rushed to make profits. JM Financial Services said in a report that it has become very difficult to understand silver at current levels. The brokerage is not advising fresh buying and said investors who already hold the metal should maintain stop losses below Rs 3,00,000 per kg, adding that although the momentum could still take prices to Rs 4,20,000 to Rs 4,50,000, the risks have increased significantly after this sharp decline.
Others are advising caution without adopting a completely bearish stance. Geojit Investments said silver remains structurally strong due to low supply and its growing role as an essential industrial metal, but warned that sharp declines are part of its nature.
It said technical indicators suggest the market was significantly overbought, and any reduction in geopolitical tensions, a stronger dollar or improvement in mine output could lead to further declines.
Some analysts still consider silver important for long-term portfolios, although they insist on discipline. He said that silver provides dual benefits due to its industrial demand in solar, electronics and medical technology as well as its role as a hedge. The sustained supply shortage over the past five years could continue through 2026, but he warned that position sizing and risk management are important after such large fluctuations.
Despite Friday’s sharp decline, silver is still on track for one of its strongest January performances on record and remains bullish for the month.
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