Silver prices continued their downward trend for the second consecutive day, plummeting 6% to ₹2,29,187 per kg. This sharp decline follows a period of high volatility in the precious metals market, with silver's recent performance significantly outpacing that of gold.
On Thursday, spot silver prices fell 9.3% to $79.88 per ounce, with prices dropping as much as 15% earlier in the session. This retreat comes after silver touched a record high of $121.64 last week. Similarly, on Friday, gold and silver prices experienced a significant drop, with silver's price decreasing by as much as 30% and gold's price falling nearly 10%.
Several factors contributed to this recent downturn. According to analysts, weakening industrial demand played a crucial role. Kunal Shah of Nirmal Bang Commodities noted a fading demand from industrial sectors, including solar panel producers in China who are seeking alternative materials, reducing their buying interest in silver. A stronger U.S. dollar has also added to the pressure, making silver more expensive for holders of other currencies. Furthermore, losses in equity markets prompted investors to sell precious metals to cover their positions. Easing geopolitical tensions also contributed to the decline as investors reduced risk positions across markets.
The recent volatility in silver prices can also be attributed to changes in market positioning. Adam Koos, President and Senior Financial Advisor at Libertas Wealth Management Group, suggested that the outsize move in silver is more about positioning and volatility than a sudden change in the physical metal markets. Michael Armbruster, co-founder and managing partner at futures brokerage Altavest, highlighted that volatility in silver was nearly three times higher than in gold.
Despite the recent slump, some analysts believe that the long-term appeal of precious metals as safe-haven investments remains intact. Sucden Financial analysts projected a possible modest near-term recovery. JPMorgan analysts remain bullish on gold, raising their year-end forecast and citing strong demand from central banks and investors. However, analysts also caution that silver prices remain sensitive to demand signals and currency movements, suggesting that price direction may remain volatile in the near term.
Given the current market conditions, analysts recommend that investors closely monitor demand trends and currency movements while managing risk during this period of high volatility. Tracking global markets and policy signals can help guide investment decisions, and position sizes may need to be reviewed as price swings remain large.