Silver futures on the Multi Commodity Exchange (MCX) surged sharply on Monday, hitting the 6% upper circuit, as a powerful global rally in precious metals gathered pace. The continuous silver contract was trading around Rs 2,67,888 per kg, up more than Rs 15,000, marking one of the sharpest single-day moves in recent years.
The strong rally in domestic prices mirrored global markets, where silver climbed to a fresh all-time high of $85.34 per ounce. Shortly after touching the peak, silver was trading over 6.8% higher at $85.31 per ounce, while gold rose more than 2.3% to around $4,608 per ounce. The broader precious metals complex also participated in the rally, with palladium and platinum posting strong gains.
Safe-haven demand intensifies amid global tensions
Silver’s surge has been driven largely by a sharp rise in global risk aversion. Escalating unrest in Iran, with reports suggesting more than 500 casualties during protests, has significantly heightened geopolitical uncertainty. Markets were further unsettled after Iran warned of possible retaliation against US military bases in the event of renewed military action.
Beyond the Middle East, broader geopolitical developments — including renewed US interventionist signals and political instability in parts of Latin America — have added to global anxiety. In such an environment, investors typically rotate towards safe-haven assets, boosting demand for precious metals such as silver and gold.
US economic data fuels rate-cut expectations
Another key catalyst behind silver’s rally has been weaker-than-expected US economic data. December employment numbers pointed to slowing job growth, with losses reported across construction, retail and manufacturing sectors. While the unemployment rate edged slightly lower, the broader data reinforced the view that the US labour market is cooling.
As a result, markets are now firmly pricing in at least two Federal Reserve rate cuts this year. Lower interest rates tend to support non-yielding assets like silver by reducing the opportunity cost of holding them, making precious metals more attractive compared with yield-bearing instruments.
Fed uncertainty adds to momentum
Uncertainty around US monetary policy has also contributed to the surge. Recent disclosures by Federal Reserve Chair Jerome Powell regarding political pressure and threats of legal action have raised concerns over central bank independence. These developments have added to investor unease around policy stability and reinforced the appeal of hard assets such as silver.
Thin liquidity and short-covering accelerate the rally
Market participants also highlighted technical factors amplifying the move. Following recent commodity index-related selling, the easing of mechanical pressure triggered fresh long positions and aggressive short-covering. Thin market liquidity further magnified the upside, allowing prices to spike rapidly and push MCX silver into the upper circuit.
With silver and gold both trading at record levels, markets are now closely tracking geopolitical developments, US macroeconomic data and central bank signals for cues on whether the rally can sustain in the near term.