Silver Slips Below Rs 2.5 Lakh/kg on MCX: Correction or Deeper Fall Ahead?
Silver prices dropped below Rs 2.5 lakh per kg on MCX after a steep rally, pressured by strong US data, a firmer dollar and heavy profit-booking.
Experts say the long-term trend remains constructive, but short-term volatility could persist if key support levels break.
Silver prices extended their decline on Friday, slipping below the Rs 2.5 lakh per kg mark on the Multi Commodity Exchange (MCX). The sharp correction has unsettled traders, especially after the metal’s extraordinary rally that had previously pushed MCX Silver futures close to Rs 4,20,000 at their peak.
Since those highs, silver has retreated significantly and is now trading in the Rs 2,30,000 to Rs 2,70,000 range, reflecting heightened volatility in both domestic and international markets.
The immediate trigger behind the decline is a mix of global macroeconomic factors.
Stronger-than-expected US economic data has dampened expectations of early interest rate cuts. When hopes of rate cuts fade, the US dollar tends to strengthen. A stronger dollar makes dollar-denominated commodities like silver more expensive for international buyers, putting downward pressure on prices.
Another key factor has been heavy profit-booking. After a sharp rally, traders often rush to lock in gains at the first sign of weakness. Once critical price levels are breached, automated selling and stop-loss triggers can accelerate the decline, amplifying the correction.
Globally, silver prices on COMEX have also corrected sharply from record highs above $121 and are now trading considerably lower, reinforcing bearish sentiment in domestic markets.
Market experts suggest that while the broader bullish structure remains intact, the recent fall has pushed prices below major moving averages — a sign of short-term bearish momentum.
On MCX, strong buying interest is visible in the Rs 2,25,000 to Rs 2,60,000 support zone. This range coincides with previous swing lows and key structural support levels. If prices hold above this band and recover decisively, the next upside targets could lie in the Rs 3,00,000 to Rs 3,25,000 range.
However, a decisive break below the support zone could intensify selling pressure and extend the correction further.
In international markets, silver is currently trading in the $73 to $84 range after correcting from its highs. Analysts highlight the $65 to $70 band as a crucial global support zone. If prices stabilise there and move back above $85 to $92, upside momentum could revive, potentially pushing silver towards $95 to $105.
The drop below Rs 2.5 lakh per kg appears dramatic given the recent peak. However, experts suggest this may represent a healthy correction within a broader bullish cycle rather than a fundamental breakdown.
The medium- to long-term outlook remains constructive, supported by:
Strong industrial demand from solar energy, electronics and electric vehicles
Structural supply constraints
Continued investor interest in precious metals as a diversification hedge
For now, silver remains in a volatile phase. US rate expectations, dollar movements, and technical support levels will play a decisive role in determining whether the metal stabilises or faces further downside.
