Silver futures contracts with March expiry traded on India’s Multi Commodity Exchange (MCX) saw a significant drop during early morning trade. Prices fell by nearly 6 percent to reach approximately ₹2.29 lakh per kilogram. The decline marked a sharp move in response to international market trends. However, partial recovery was observed later in the session. At around 11:50 AM, the silver futures were down by 1.81 percent, trading at ₹2,39,397 per kilogram, recording a loss of ₹4,418 from the previous settlement.
Global silver prices fall below key $70 level
Silver prices in the international market slipped below the psychological level of $70 per ounce, contributing to the bearish sentiment among traders and investors globally. The drop in global prices influenced domestic commodity markets as well, leading to lower price levels in Indian exchanges. The decline is being attributed to a stronger US dollar and shifting investor preference towards riskier assets, which typically puts pressure on the demand for precious metals.
Silver ETFs in India register up to 8 percent decline
The fall in silver prices also impacted silver exchange-traded funds (ETFs) listed in the Indian market. Tracking the global and domestic spot price movements, several silver ETFs registered up to an 8 percent fall in a single trading session. These ETFs, which are designed to mirror the performance of silver, reacted sharply amid volatility in the underlying asset. Investors holding silver ETFs experienced reduced returns, prompting questions around future movements and potential buying opportunities.
Investor sentiment remains cautious amid price volatility
Market participants are currently exercising caution due to increased fluctuations in silver prices. The metal, often considered a hedge against inflation and market uncertainty, is now witnessing weakened demand from institutional buyers. Lower prices have also invoked concerns regarding short-term returns from silver-linked financial products. Despite the decline, some analysts believe that periodic corrections are part of the broader trend in commodities, though no clear consensus has emerged on future price projections.
Broader impact on precious metals and commodity market
The sharp movement in silver prices comes at a time when the overall commodity market is experiencing fluctuation amid changing global economic indicators. Gold prices have remained relatively more stable compared to silver, with investors showing a diversified approach towards precious metals. The downward trend in silver may also influence related sectors such as jewellery, electronics manufacturing, and industrial applications, where silver plays a crucial role.
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