Silver prices crash 6% today: Here we decode why
What's the story
Silver prices in India witnessed a sharp decline today, falling by 6% or ₹13,606 to ₹2,13,166 per kg on the Multi Commodity Exchange (MCX). The fall comes amid rising geopolitical tensions in the Middle East and their impact on global markets. Gold prices also fell around 5% or ₹7,115 to ₹1,37,377 per 10g on MCX.
Global impact
Gold falls for 9th consecutive session
The international market mirrored the domestic trend, with spot silver falling 3.2% to $65.61 per ounce and spot gold dropping 2.5% to $4,372.86 per ounce. Gold has now fallen for nine consecutive sessions, hitting its lowest level since early January and losing over 10% in the past week. US gold futures also fell sharply by 4.4%, indicating a continued bearish sentiment in the market.
Market factors
Geopolitical tensions, oil prices, and interest rate expectations
The recent fall in gold and silver prices is attributed to a combination of geopolitical tensions, rising oil prices, and changing interest rate expectations. Crude oil prices have crossed $110 per barrel, raising global inflation concerns. Higher inflation usually prompts central banks like the US Federal Reserve to postpone interest rate cuts or keep rates higher for longer. This environment is unfavorable for non-yielding assets like gold and silver as investors tend to shift toward interest-bearing instruments when rates remain elevated.
Conflict escalation
Iran threatens to retaliate against US in case of attack
The intensifying conflict in the Middle East has further complicated matters. Iran has threatened to target energy and water systems of its Gulf neighbors if US President Donald Trump goes ahead with his threat to hit Iran's electricity grid within 48 hours. The threat comes amid reports that the US is sending thousands of additional marines and sailors to the region, adding to fears of a wider regional war and disruption to global energy supplies.
Future prospects
Cautious optimism prevails in silver market
Despite the near-term pressure on silver prices, the overall market structure remains cautiously optimistic. The recent correction has pushed prices into a consolidation phase with key support and resistance levels becoming critical for future directional moves. Ponmudi R, CEO of Enrich Money, said "the broader bullish bias remains intact." However, he added this outlook would weaken if there is a decisive break below the key $60-$65 support zone while geopolitical developments are expected to continue influencing price direction.