Silver prices witnessed a sharp sell-off on the Multi Commodity Exchange (MCX) on Friday, with silver futures hitting the lower circuit of 9%, extending losses seen earlier in the session amid intense selling pressure.
The MCX Silver continuous contract (SILVER1!) dropped to around Rs 3,63,903 per kg, down nearly 9%, while other active contracts such as SILVERM1, SILVERMIC1 and near-month silver futures also declined by the maximum permissible limit of 9%, triggering lower circuit conditions across contracts.
Profit booking after record highs
The sharp fall comes after silver had surged to record highs earlier this week, supported by strong safe-haven demand, supply tightness, and aggressive momentum buying. Following the steep rally, traders moved swiftly to lock in profits, resulting in heavy selling across both global and domestic markets.
Global cues add pressure
Internationally, silver prices cooled sharply after failing to sustain levels near $120 per ounce. Spot silver fell over 4% globally, mirroring a broader pullback in precious metals. The correction overseas spilled into domestic markets, amplifying losses on MCX.
Stronger dollar and premium compression
A rebound in the US dollar further weighed on precious metals, as a firmer dollar makes commodities priced in dollars less attractive to non-US investors. Additionally, Indian silver prices had been trading at a steep premium to global benchmarks in recent sessions. As global prices corrected, this premium began to compress rapidly, leading to a sharper fall in MCX silver, which is inherently more volatile.
Volatility spikes across silver contracts
The synchronized 9% decline across silver contracts highlights the heightened volatility in the metal after its parabolic run-up. Market participants are now closely watching global price action, dollar movement, and risk sentiment for further cues.
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