Following a dramatic rally, silver prices on the Multi Commodity Exchange (MCX) witnessed a sharp correction on Monday, plunging by Rs 21,000 per kilogram within just an hour of afternoon trading. MCX Silver March futures dropped to an intraday low of Rs 2,33,120 per kg as investors rushed to book profits.
According to an Economic Times report, the decline followed the white metal’s surge to a record high of Rs 2,54,174 earlier in the session. Internationally, silver experienced extreme volatility, briefly breaching the $80 per ounce mark for the first time on Monday before reversing sharply to slip below $75.
What triggered the sudden crash?
Silver has climbed 181% year-to-date, outpacing gold, driven by its designation as a critical mineral in the United States, limited supply, depleted inventories, and growing industrial demand alongside heightened investor interest.
Monday’s pullback was fueled by profit-taking and reports indicating progress in negotiations between US President Donald Trump and Ukrainian President Volodymyr Zelensky toward a potential peace deal, according to ET. Trump stated on Sunday that he and Zelensky were “getting a lot closer, maybe very close” to reaching an agreement to end the conflict in Ukraine.
The steep correction also reflects broader profit-booking across the bullion market, as easing geopolitical tensions have reduced safe-haven demand. Additional downward pressure came from the Chicago Mercantile Exchange’s decision to raise margin requirements, effective Monday. The exchange increased the initial margin for the March 2026 silver futures contract to approximately $25,000, up from $20,000 earlier this month.
Jigar Trivedi, senior research analyst at Reliance Securities, noted that while the broader outlook for silver remains positive, sharp volatility is expected. He identified Rs 2.4 lakh per kg as a critical near-term support level.
Analysts warn of ‘parabolic’ rally risks
US financial services firm BTIG has cautioned that the rally in precious metals has turned “parabolic”—a pattern that historically ends with a swift, sharp reversal rather than a gradual decline. “Parabolas only end one way, with an equal and opposite downside reaction. They do not correct through time,” the firm stated.
From a technical standpoint, silver is currently trading roughly 89% above its 200-day moving average. BTIG observed that, aside from the Hunt Brothers-driven squeeze in 1979, instances where silver traded even 60% above its 200-day moving average were followed by significantly lower prices within 20 to 40 days. “Even if the underlying fundamentals are different this time, the 174% year-to-date rally appears to have already factored in much of the positive narrative,” the firm noted.
Silver surged more than 10% on Friday, recording one of its largest single-session gains. BTIG analyst Jonathan Krinsky highlighted that the last comparable move when prices rose 10% while hitting a multi-month high occurred in 1987 and was followed by a roughly 25% decline in subsequent weeks.
Manish Banthia, chief investment officer for fixed income at ICICI Prudential Mutual Fund, said historical patterns suggest that such dramatic advances rarely conclude smoothly. “History offers some stark reminders. During 1979-80, silver climbed from $6 to $49 an ounce before plunging by over 90%. In 2011, prices peaked close to $48 and subsequently declined by more than 75%. In both episodes, silver had already risen multiple times before the downturn set in. Since the pandemic lows, prices have increased more than six times, and over the past year alone they have nearly tripled,” he told ET.
Past market cycles indicate that once upward momentum fades, silver prices can correct sharply often by 50% or more, the report added.
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