Silver prices witnessed an unprecedented sell-off on the Multi Commodity Exchange (MCX), hitting the 12% lower circuit and sliding by nearly Rs 50,000 per kilogram in today’s session. The sharp fall extended the ongoing correction in precious metals after silver had surged to record highs earlier this week, making it one of the most volatile assets in the commodity space right now.
The steep decline came amid aggressive global profit booking following a near-parabolic rally in silver prices. Internationally, silver had rallied close to the $120 per ounce mark before reversing sharply, prompting traders to lock in gains. The correction was amplified in India due to elevated domestic premiums, which began compressing rapidly as global prices cooled, leading to a sharper fall on MCX compared with overseas markets.
Adding to the pressure, speculation around a potential shift in US monetary policy leadership weighed heavily on precious metals. Markets reacted to reports suggesting that Kevin Warsh could be appointed as the next US Federal Reserve chair. Analysts noted that Warsh has been a long-time critic of ultra-loose monetary policy, prompting fears of a tighter policy stance in the future. A rebound in the US dollar alongside these expectations further hurt silver, which typically moves inversely to the greenback.
The sell-off also reflected forced unwinding of leveraged positions, as silver had become a crowded trade after months of strong gains driven by safe-haven demand, supply tightness, and momentum buying. Once prices started slipping, stop-loss triggers and margin pressures accelerated the fall, pushing the contract to its lower circuit limit.
Despite the sharp correction, market participants remain cautious, with volatility expected to stay elevated in the near term as traders reassess positioning after the record run-up in silver prices.
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