Silver prices rebounded sharply on Tuesday, February 3, recovering more than 7% on the Multi Commodity Exchange (MCX) after a brutal two-day selloff that wiped out as much as 40% of its value from record highs.
MCX silver futures rose to around Rs 2,54,426 per kg, gaining Rs 18,165 or 7.69%, as bargain hunting emerged following last week’s historic plunge. The rebound mirrored a recovery in global markets, with spot silver climbing back above $83 per ounce after tumbling as low as $79 earlier in the session.
What triggered the rebound
The sharp bounce comes after silver suffered its largest-ever single-day fall of 26% on January 30, triggered by the announcement that US President Donald Trump nominated Kevin Warsh as the next Chair of the Federal Reserve. Warsh is widely viewed as a hawkish policy maker, prompting a sharp rise in the US dollar and forcing investors to unwind crowded long positions in precious metals.
The selloff was further intensified by rapid long liquidation and profit booking, particularly among Chinese speculative investors, who had played a major role in driving silver to record highs during January.
Rally drivers remain structurally intact
Despite the violent correction, key structural drivers behind silver’s long-term rally remain unchanged. Precious metals surged through January amid geopolitical uncertainty, currency debasement concerns, and rising questions over the Federal Reserve’s independence, boosting safe-haven demand.
Silver has also been supported by a structural supply deficit, while strong investment inflows — especially from China — amplified the earlier rally. Market participants note that the same investor base that exited aggressively could return if sustained dip-buying emerges.
India-positive global development
Adding to sentiment, India-linked macro news also turned supportive. US President Donald Trump announced a new trade deal with India, under which US tariffs on Indian goods will be reduced to 18% from 50%, in exchange for India halting Russian oil purchases and lowering trade barriers.
Trump said the agreement followed a call with Prime Minister Narendra Modi, adding that India would significantly increase purchases of US energy, including oil and coal, along with technology, agricultural and other products. He also stated that India would move toward reducing tariff and non-tariff barriers against the US.
The announcement eased broader risk sentiment and supported commodity prices, including precious metals, in early Asian trade.
Market outlook
While volatility remains elevated after the unprecedented price swings, traders are closely watching whether silver can stabilise above key psychological levels. The sharp rebound suggests that forced selling may have peaked, though markets remain sensitive to further developments around US monetary policy and global trade.
