Silver prices on the Multi Commodity Exchange (MCX) witnessed a sharp and sudden correction on Thursday, crashing from recent highs near Rs 4.20 lakh per kg to around Rs 3.55 lakh per kg. The move marks a steep decline of nearly 15% from the peak in a short span, triggering heightened volatility across the domestic bullion market.
The sharp fall comes after silver had surged to record highs earlier this week, driven by strong global safe-haven demand, supply tightness, and spillover strength from gold. However, multiple factors combined to trigger a rapid unwind, leading to one of the sharpest corrections seen in recent times.
Profit booking after a parabolic rally played a major role in the decline. Silver had rallied aggressively over the past few sessions, touching all-time highs both globally and on MCX. Prices had moved far ahead of short-term fundamentals, prompting traders and investors to lock in gains. As profit selling intensified, heavy selling pressure emerged across futures contracts.
Another key factor was the cooling in global silver prices. International silver prices, which had surged close to the $120 per ounce mark, showed signs of consolidation and mild pullback. Since MCX silver had been trading at a steep premium of over 16% to global benchmarks, even a modest correction overseas triggered an outsized reaction in domestic prices.
The fall was further amplified by the unwinding of India’s elevated silver premium. Market data showed that Indian silver prices were trading at one of the highest premiums over COMEX and LBMA prices in recent years. As global prices stabilised, this premium began to compress, accelerating the decline on MCX.
Silver prices were also hit by strong volatility across metals. The correction came amid extreme swings in precious and base metals following record highs in gold and copper. As risk appetite cooled and prices started correcting across commodities, leveraged positions in silver were among the first to be unwound.
Finally, margin pressure and stop-loss triggers likely added to the sharp fall. The sudden intraday move is believed to have triggered margin calls and automated stop-loss orders, amplifying downside momentum. Silver remains one of the most volatile commodities, and such sharp corrections are common after near-vertical rallies.
Going ahead, market participants are closely watching whether silver stabilises near current levels or witnesses further volatility, as global metals markets remain under pressure.
