Silver prices experienced a dramatic plunge as trading commenced on the Multi Commodity Exchange (MCX) today, coinciding with the opening of the Budget Session. The price of silver plummeted as much as 27%, dragging it below ₹3 lakh per kg, a significant retreat after reaching a record high of around ₹4 lakh per kg just the previous day.
On Friday, MCX Silver March futures crashed 27% to settle at ₹2,91,925 per kg, marking a historic rout in the precious metal. This sharp correction follows a period of unprecedented gains, with silver and gold both reaching all-time highs earlier in the week.
In Delhi's bullion market, silver prices fell by ₹20,000 per kg, or nearly 5%, to ₹3,84,500 per kg, inclusive of all taxes. This steep decline occurred after silver had surged by ₹19,500 to reach an all-time high of ₹4,04,500 per kg. The international spot silver market also experienced heavy selling pressure, with prices dropping by $14, or 12.09%, to $101.47 per ounce. During the day, silver even slipped 17.5% to $95.26 per ounce, after touching a record $121.45 per ounce on Thursday.
The fall in prices is attributed to a combination of factors, including profit-booking after the recent rally, a strengthening US dollar, and speculation about a more hawkish stance from the US Federal Reserve. Higher US Treasury yields and a stronger dollar tend to decrease the appeal of precious metals like silver and gold.
Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd., noted that the price drops triggered lower circuit levels across all silver contracts. He characterized the situation as strong profit-booking following the surge in prices.
The World Gold Council has expressed concerns about a potential decrease in India's jewelry demand due to the high prices. They also observed a slowdown in central bank purchases of gold in the last quarter of 2025, although strong investor interest partially offset this decline.
Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget 2026 on February 1st, with potential announcements that could influence bullion prices in the coming weeks. Market participants are keenly awaiting any changes to the customs duty on gold and silver or any other significant announcements related to precious metals.
The dramatic price movement underscores the volatility in the precious metals market, influenced by global economic factors, currency fluctuations, and investor sentiment. Traders and investors are advised to closely monitor market developments and policy announcements for potential impacts on silver prices.
