Silver futures hit the 6% lower circuit on MCX today during the special Budget Day trading session, extending the sharp correction seen across global metals after last week’s historic selloff.
Here are the key reasons behind today’s sharp fall in silver:
1. Aftershock of January’s historic silver crash
Silver had already suffered an extraordinary collapse of 25–36% in a single session in late January, one of the worst falls in modern trading history. Today’s 6% lower circuit reflects continuing unwinding of leveraged positions rather than a fresh trigger.
2. Profit booking after a parabolic rally
Silver had surged nearly 70% in January, making it one of the most crowded trades in global commodities. Once prices began falling, profit booking turned aggressive, with traders rushing to exit simultaneously.
3. Gold crash triggered forced liquidation
Silver often trades as a high-beta version of gold. After gold recorded its worst single-day fall in over four decades, margin calls forced traders to liquidate silver positions to meet collateral requirements, amplifying losses.
4. Stronger US dollar pressure
The US dollar strengthened after President Donald Trump announced former Fed Governor Kevin Warsh as his pick to lead the Federal Reserve. A firmer dollar makes dollar-priced metals like silver more expensive for global buyers and triggers model-driven selling.
5. Leverage and thin liquidity
Silver markets carry much higher leverage than gold. As prices reversed, stop-losses, algorithmic selling, and options hedging cascaded rapidly. Thin liquidity during parts of the session allowed prices to gap lower, pushing silver straight into the lower circuit.
Why silver fell more than other metals
Silver typically sees larger percentage swings than gold due to higher speculative participation, thinner liquidity, and greater sensitivity to forced selling. While gold and copper also hit lower circuits, silver absorbed the heaviest pressure.
The bottom line
Silver’s 6% fall on MCX today is part of a broader post-rally reset, driven by profit booking, leverage unwinding, a stronger dollar, and lingering shock from January’s historic crash. The move highlights how violently silver can correct after parabolic rallies, especially during periods of heightened volatility like Budget Day.
