Silver prices on the Multi Commodity Exchange (MCX) experienced their most severe decline when they dropped 27% within one trading day. The metal dropped from a peak value of Rs 4 lakh per kilogram to Rs 2.91 lakh, which resulted in its largest daily decrease of Rs 1,07,968. The crash destroyed all profits which investors had achieved from the previous year’s 170% price increase while it caused major fluctuations in their investment returns.

Key Statistics:

• MCX Silver March Futures: Fell Rs 1,07,968 (-27%) to Rs 2,91,925 per kg
• International Spot Silver: Dropped 28% to $85 per troy ounce (from $121.60)
• Gold February Futures (MCX): Down Rs 20,514 (-12%) to Rs 1,50,440 per 10g

Factors Behind the Crash:

1. Stronger US Dollar
   The nomination of Kevin Warsh as the new U.S. Federal Chair strengthened the Greenback, with the Dollar Index climbing above 97. The stronger dollar creates decreased silver demand from international markets which raises costs for overseas purchasers and reduces interest in assets that do not produce income.
2. Gold Decline
   Silver often tracks gold prices, which also corrected sharply. Spot gold fell 4.7% to $5,143.40 per ounce after reaching record highs, exerting downward pressure on silver. Analysts from Citi Research cited the Fed’s independence as a bearish factor for precious metals.
3. Profit Booking
   After significant rallies, investors engaged in profit booking. Experts recommended trailing profit stops for holdings below Rs 3 lakh per kg, acknowledging that momentum could still push silver prices higher, but risks have increased considerably.

Expert Analysis & Outlook

• Hareesh V, Geojit Investments: Silver maintains its strategic value and industrial applications although its price experiences extreme fluctuations. The market will experience corrections due to three main factors which include strength in the U.S. dollar and higher mining production and decreased global political tensions.
• Aamir Makda, Choice Broking: Silver’s industrial applications in solar energy, IT, and medical technology provide a dual advantage. Expect deficits to continue in 2026, driving prices higher for the long-term.

The silver market reached its highest monthly performance in January after the market experienced a significant price decline. Analysts predict that silver will remain attractive for investorsduring the medium to long term because of existing structural supply deficitsand continuous industrial demand.