Silver Prices Experience Sharp 6% Decline After Record-Breaking Rally
Silver prices witnessed a significant correction on Friday, January 30, crashing by 6% as a firmer US dollar weighed on market sentiment. This decline comes despite the precious metal remaining on track for a historic monthly performance, highlighting the volatile nature of commodity markets.
Domestic and Global Market Movements
On the Multi Commodity Exchange (MCX), silver prices fell sharply by 6%, settling at ₹3,75,900 per kilogram. This drop followed a record high of ₹4,20,048/kg achieved in the previous session on January 29. From its peak, silver has now declined by approximately 10%, translating to a loss of over ₹44,000 per kilogram.
Globally, spot silver prices slipped by 0.2% to $115.83 per ounce. This minor retreat occurred after the white metal touched a fresh all-time high of $121.64 on Thursday. Remarkably, silver has surged by about 62% so far in January, positioning it for its strongest monthly performance on record.
Factors Driving the Price Correction
The pause in silver's rally was primarily driven by the US dollar index inching higher. The dollar found support after the US Federal Reserve decided to keep interest rates unchanged earlier in the week, although it remained set for a second consecutive weekly decline.
Fed Chair Jerome Powell indicated that inflation in December was likely still above the central bank's 2% target. Additionally, data showed that weekly US jobless claims fell, signaling limited layoffs. However, subdued hiring kept labor market sentiment cautious. Geopolitical tensions also remained elevated amid reports that US President Donald Trump is weighing options against Iran, adding to market uncertainty.
Gold and Other Precious Metals Performance
Gold prices also retreated alongside silver. Spot gold was down 0.9% at $5,346.42 per ounce by 0124 GMT, after hitting a record $5,594.82 a day earlier. Gold has climbed over 24% in January, marking its biggest monthly rise since 1980. Meanwhile, US gold futures rose 1.3% to $5,390.80.
Among other precious metals, spot platinum fell 0.9% to $2,606.15 after reaching a recent peak, while palladium gained 0.5% to $2,016.69.
Market Outlook and Technical Perspectives
Policy uncertainty surrounding economic growth, trade, and fiscal sustainability continues to weigh on the US dollar. This environment lifts volatility expectations and supports precious metals. Ross Maxwell, Global Strategy Operations Lead at VT Markets, noted that this backdrop is constructive for safe-haven assets. He stated, "Equities may grind higher, but with higher cross-asset volatility as markets adjust to a Fed that is increasingly sensitive to downside risks."
A softer or range-bound dollar tends to benefit gold and silver, while heightened uncertainty boosts demand for assets less exposed to policy missteps or fiscal stress. Globally, this dynamic can also ease financial conditions outside the US, supporting emerging market assets and commodities, even as overall risk sentiment remains fragile.
From a technical perspective, Renisha Chainani, Head of Research at Augmont, provided specific targets. For gold, sustaining above $5,600 (approximately ₹1,87,000) could pave the way for a move towards $5,800–6,000 (₹1,87,000–1,95,000), with strong support seen near $5,200–5,020 (₹1,60,000). For silver, a decisive break above $118 (₹4,05,000) could open targets of $125–130 (₹4,30,000–4,50,000), with key support at $110 (₹3,75,000).
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
