MCX silver futures declined around 3.16% to Rs 2,32,315 per kg on Tuesday (as of 11:14 AM IST), tracking a sharp fall in global prices and weak cues from Asian markets.
1. Tracking global spot silver slump
The primary trigger is the nearly 6% drop in global spot silver, which slipped to around $73 per ounce. The global correction has extended a three-week losing streak in precious metals after an earlier speculative rally.
Silver had surged above $120 per ounce in late January, driven largely by aggressive buying from Chinese traders. However, prices later corrected sharply as leveraged positions were unwound and investors liquidated holdings to manage losses in other asset classes. That global weakness is now directly reflecting in MCX contracts.
2. Thin liquidity in Asian markets
Market holidays across China, Hong Kong and parts of Asia led to relatively thin trading volumes. Lower liquidity often exaggerates price movements, intensifying volatility in commodities like silver.
With Asia being a key demand and trading hub for metals, reduced participation added to the downside pressure.
3. Profit-booking and spillover effect
After a sharp rally earlier in the year, traders appear to be booking profits amid uncertainty over global monetary policy. Even though softer US inflation data last week briefly supported prices, the rebound failed to sustain.
4. Focus on US Federal Reserve signals
Investors are now awaiting the upcoming Federal Reserve minutes and the core PCE price index for clarity on the interest rate outlook. Markets are pricing in a potential rate cut by July, with rising expectations of a possible move in June.
Until there is clearer policy direction, volatility in global silver is likely to continue — and MCX prices are expected to mirror global trends closely.
