Silver futures opened at a 6% lower circuit during the special trading session on Sunday, February 1, as the metal continued to reel from one of the most violent selloffs in its modern trading history. On the Multi Commodity Exchange, silver futures slipped to around Rs 2,74,410 per kg, reflecting sustained panic after the late-January collapse.
The weak opening comes just days after silver prices plunged between 25% and 36% in a single session, marking one of the sharpest one-day crashes ever recorded. The fall was significantly steeper than gold’s decline and caught most market participants off guard.
Extreme speculative overcrowding
Silver had turned into one of the most crowded trades across global commodity markets after rallying nearly 70% in January. Futures, options, and leveraged positions had surged, pushing technical indicators such as the RSI into extremely overbought territory. Once prices began to slip, the unwinding turned disorderly as too many traders rushed to exit at the same time.
Gold crash triggered forced selling
Silver’s decline accelerated after gold recorded its worst single-session fall in over four decades. As a high-beta precious metal, silver absorbed the shock through margin calls and forced liquidations, with traders selling aggressively to meet collateral requirements.
Dollar rebound added pressure
A sharp rebound in the US dollar further weighed on silver prices. Dollar strength tends to hurt silver more than gold, given its dual role as both a precious and industrial metal, reducing global demand while pressuring speculative positions.
Leverage and derivatives unwind
Silver markets are highly sensitive to leverage. As prices reversed, stop-losses, algorithmic selling, and options hedging cascaded rapidly, while thin liquidity during parts of the session allowed prices to gap lower with little buying support.
Narrative reversal hit silver harder than gold
The rally had been driven by the “currency debasement” trade linked to expectations of aggressive monetary easing. As confidence in policy stability improved, this narrative unraveled sharply. Given silver’s speculative nature, the impact was far more severe than in gold.
Why silver fell much more than gold
While gold declined around 9–12%, silver’s fall of over 30% reflected higher leverage, thinner liquidity, heavier speculative participation, and stronger sensitivity to forced selling. Similar patterns were seen during the 1980 silver crash and the 2011 peak reversal.
The takeaway
Silver’s collapse was not driven by a single trigger but by a perfect storm of overcrowded positioning, leverage, dollar strength, and rapid narrative shifts. The January 2026 episode serves as a reminder that silver can move with extreme speed and magnitude when sentiment turns, even after strong rallies.
