MCX silver crash: Prices nosedive 25% to Rs 3.42 lakh/kg amid global metals rout

The dramatic fall wiped out almost Rs 1 lakh per kilogram, following a record rally earlier this week.

• Silver prices dropped almost 15% on MCX after reaching record highs this week.
• Global selloff driven by profit-taking, stronger dollar, and technical factors
• CME increased margins for gold and silver futures due to high market volatility.

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Silver prices plunged sharply on the Multi Commodity Exchange (MCX) on Friday, recording one of the steepest single-day declines in recent history. March silver futures closed at Rs 3,42,390 per kilogram, down nearly 25% from Thursday’s close of Rs 4,54,000, after opening the session at Rs 3,83,646.

The dramatic fall wiped out almost Rs 1 lakh per kilogram, following a record rally earlier this week.

The crash mirrored global trends, with spot silver tumbling around 28% to $85 per troy ounce from recent all-time highs of $121.60, as investors rushed to book profits amid heightened volatility in metals markets.

The selloff reflected global market trends, with Comex spot silver falling to $98 an ounce, a 14.15% decline from the previous close. Gold also tumbled, dropping 8.9% to $4,894.23 an ounce in New York, while platinum and palladium similarly slumped. Copper on the London Metal Exchange fell 3.4% to $13,157.50 a ton, retreating from Thursday’s record above $14,000.

Analysts attributed the sharp drop to profit-taking after a historic rally in precious metals, combined with a resurgent U.S. dollar following President Donald Trump’s nomination of former Fed Governor Kevin Warsh as the next Federal Reserve Chair. Investors interpreted the appointment as a signal of a stronger dollar and the possibility of tighter monetary policy, prompting a selloff in dollar-priced commodities.

Technical factors also amplified the decline.

A wave of option trades in gold and silver had mechanically reinforced prices on the way up, creating a “gamma squeeze” effect, where dealers are forced to buy as prices rise and sell as they fall. Gold’s relative strength index (RSI) recently hit 90, the highest level in decades, signaling an overbought market.

The market’s extreme volatility prompted CME Group to raise margins for Comex gold and silver futures. Silver margins for non-heightened risk profiles will increase from 11% to 15%, while gold margins rise from 6% to 8%, effective from Monday’s close.

The move is designed to ensure adequate collateral coverage amid the sudden price swings.

Despite the Friday rout, silver and gold still recorded strong gains for January, with silver up 19% and gold up 13% for the month. Analysts warned that volatility could persist ahead of China’s Lunar New Year holiday on February 16, when top metals consumers are expected to reduce trading activity.

The metals markets have been fueled by ongoing geopolitical tensions, macroeconomic uncertainty, and shifts in U.S. policy, particularly the potential for a weaker dollar prior to Warsh’s nomination. Market participants remain cautious, anticipating further sharp swings in both precious and industrial metals.