Silver price today: After a stunning rally, silver prices for the MCX Silver March futures crashed sharply on Monday, dropping by a huge Rs 21,000 per kg in just an hour of afternoon trade. MCX Silver march futures dropped to an intraday low of Rs 2,33,120 per kg as investors rushed to lock in gains.According to an ET report, the decline in silver prices came after the white metal had rallied to a record high of Rs 2,54,174 earlier in the session. Globally, silver saw heightened volatility, briefly crossing the $80 per ounce threshold for the first time on Monday before reversing course and sliding below $75.
Why have silver prices crashed suddenly?
So far this year, silver has surged 181%, outperforming gold, supported by its classification as a critical mineral in the US, constrained supplies and depleted inventories against the backdrop of rising industrial usage and investor interest.Today’s pullback in silver price rally was driven by profit taking and reports suggesting progress in discussions between US President Donald Trump and Ukrainian President Volodymyr Zelensky over a possible peace agreement, according to ET.Trump said on Sunday that he and Zelensky were “getting a lot closer, maybe very close” to an agreement to end the war in Ukraine.The sharp correction in silver prices also reflects a wider bout of profit booking across the bullion market, as easing geopolitical risks have dented safe haven demand. Additional pressure has come from a margin increase announced by the Chicago Mercantile Exchange, which runs key derivatives platforms including CME, COMEX, CBOT and NYMEX, effective from today.The exchange has increased the initial margin requirement for the March 2026 silver futures contract to around $25,000, compared with $20,000 earlier this month.Jigar Trivedi, senior research analyst at Reliance Securities, said the broader outlook for silver remains constructive but marked by sharp swings, adding that the Rs 2.4 lakh level is emerging as an important near-term support.US financial services firm BTIG has cautioned that the rally in precious metals has turned “parabolic,” a pattern it says typically ends with a swift and sharp reversal rather than a gradual correction. “Parabolas only end one way, with an equal and opposite downside reaction. They do not correct through time,” the firm said.From a technical perspective, silver is currently trading about 89% above its 200-day moving average. BTIG noted that, apart from the Hunt Brothers driven squeeze in 1979, instances where silver traded even 60% above its 200-DMA were followed by significantly lower prices 20, 30 and 40 days later. “Even if the underlying fundamentals are different this time, the 174% year-to-date rally appears to have already factored in much of the positive narrative,” the firm said.Silver surged more than 10% on Friday, marking one of its biggest single-session gains on record. BTIG analyst Jonathan Krinsky pointed out that the last comparable move, when prices rose 10% while reaching a multi-month high, occurred in 1987 and was followed by a drop of about 25% in the weeks that followed.Manish Banthia, chief investment officer for fixed income at ICICI Prudential Mutual Fund, said historical patterns show that such dramatic advances in silver seldom conclude smoothly.“History offers some stark reminders. During 1979-80, silver climbed from $6 to $49 an ounce before plunging by over 90%. In 2011, prices peaked close to $48 and subsequently declined by more than 75%. In both episodes, silver had already risen multiple times before the downturn set in. Since the pandemic lows, prices have increased more than six times, and over the past year alone they have nearly tripled,” he said according to the ET report.Past market cycles indicate that once the upward momentum fades, silver prices can correct sharply, often by 50% or more, the report added.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
