Silver prices in India have plunged 33% from their all-time high, slipping below Rs 2.6 lakh per kilogram for the first time in months, dragging gold prices down with it in a stark reminder of volatile commodity markets. Traders watched in disbelief as MCX silver futures closed at Rs 2.58 lakh/kg on Monday, down over 5% in a single session, while spot gold tumbled to Rs 68,500 per 10 grams amid heavy selling pressure.
The downturn traces back to a confluence of global factors battering precious metals. A resurgent US dollar, fueled by hawkish Federal Reserve signals on sustained high interest rates, has made dollar-denominated assets more attractive, squeezing demand for silver and gold. China's economic slowdown has further eroded industrial appetite for silver, used heavily in solar panels, electronics, and EVs, with factory activity contracting for the fifth straight month according to official data.
In India, the impact ripples through jewelry hubs like Mumbai's Zaveri Bazaar and investor portfolios nationwide. "We've seen cancellations pile up as buyers hold off, hoping for deeper corrections," said Rajesh Khona, CEO of Prithviraj Jewelers. Small-scale refiners and fabricators, already squeezed by high energy costs, face margin erosion, prompting some to halt operations. The rupee's mild depreciation offered scant cushion against the global rout.
Analysts point to technical breakdowns as well: Silver breached key support at Rs 2.75 lakh, triggering algorithmic sell-offs and margin calls. Gold, often a safe-haven, failed to rally amid fading geopolitical tensions in the Middle East. "This is a classic risk-off move; expect more pain if US non-farm payrolls surprise to the upside this Friday," warned Motilal Oswal's commodity head, Siddhartha Khemka.
Looking ahead, bargain hunters may eye entry points, but caution prevails. With the wedding season looming, any festive rebound could be fleeting against macroeconomic headwinds. The Silver Institute projects global supply deficits narrowing in 2026, potentially capping the downside, yet persistent inflation fears keep upside limited. Investors are advised to diversify beyond bullion into equities or fixed income as markets recalibrate.
