Silver Prices Experience Sharp Decline Amid Global Market Pressures
The silver market witnessed significant volatility on Friday, with the precious white metal opening with a substantial downside gap during the early morning session of Asian markets. This dramatic movement has captured the attention of investors and analysts worldwide, signaling potential turbulence ahead for the commodity.
Market Opening Sees Dramatic Plunge
The COMEX silver rate commenced trading on Friday with a pronounced downward gap, rapidly descending to an intraday low of $63.900 per ounce within mere minutes of the Opening Bell. This bearish sentiment quickly spread to domestic markets, where the MCX silver rate mirrored the weakness, touching a morning session low of ₹2,29,187 per kilogram.
However, the precious metal demonstrated resilience as the trading day progressed. Value buying emerged at these lower levels, initiating a recovery that pared the early-morning losses across both domestic and international platforms. By the market's close, the silver price in India had turned positive, reaching an intraday high of ₹2,48,897 per kilogram. Similarly, the COMEX silver rate briefly entered positive territory, climbing to $76.925 per ounce.
Expert Analysis: A Dead-Cat Bounce?
Market specialists are interpreting these rebounds with caution. According to their assessment, the silver price has likely reached the peak of its year-long rally, with recent recoveries from lows representing what they term a "dead-cat bounce." In such scenarios, the white metal is expected to establish new lows without surpassing recent highs, gradually widening the gap from its record levels.
Anuj Gupta, a SEBI-registered market expert, identified two primary factors driving the recent decline in MCX and COMEX silver rates. "The easing of tensions between the United States and Iran, coupled with the strengthening of the US Dollar against major global currencies, has significantly impacted silver prices," Gupta explained. He noted that as Iran and the US agreed to initiate nuclear talks, the US Dollar gained momentum in foreign exchange markets, reducing the safe-haven demand for precious metals like gold and silver and triggering profit-booking.
Gupta further clarified that the late-session recovery in gold and silver prices on Friday resulted from profit-booking in the US Dollar, though the Dollar index remains robust at approximately 97.50 after nearing 96 the previous week.
Structural Weaknesses in Silver Demand
Amit Goel, Chief Global Strategist at PACE 360, reinforced the bearish outlook, describing the recent price rebounds as mere dead-cat bounces. "The rally in silver prices has concluded, and we anticipate a sharp correction following such temporary recoveries," Goel stated. He emphasized that during these bouncebacks, silver would likely create new lows without breaking above recent highs.
Addressing the contradiction of bearish sentiment despite silver's strong performance in January 2026, Goel pointed to fundamental shifts in industrial demand. "Proponents of demand-supply constraints must recognize that industries can only absorb raw materials while remaining economically viable," he argued. "With silver prices skyrocketing, some industrial applications have already been compromised."
Goel highlighted specific examples, noting that photovoltaic cells and the solar industry have successfully transitioned from silver to copper. Similarly, efforts are underway in solid-state battery technology to replace silver-coil binding with copper-coil alternatives. Companies in Israel, Taiwan, Australia, and China are actively pursuing this substitution, potentially reducing long-term silver demand.
Historical Precedents for Caution
Anuj Gupta urged silver investors to consider historical patterns, recalling significant crashes following strong bull trends. "In 1980, when the Hunt Brothers reportedly accumulated about one-third of global silver reserves, exchanges increased margins, leading to short covering and a liquidity squeeze," Gupta recounted. "Silver prices plummeted from approximately $49.50 to around $11 per ounce."
A similar pattern emerged in 2011 when silver rates fell 75% after peaking near $48 per ounce. Gupta noted that margin increases have already begun, with the Chicago Mercantile Exchange raising margins twice in the past two months, potentially signaling similar market dynamics.
Projected Price Corrections
When questioned about potential declines from recent peaks, Amit Goel of PACE 360 projected a substantial correction. "Silver prices could crash approximately 75% to 80% from the peak of $121 per ounce levels," he estimated. However, Goel cautioned that the decline would not be unilateral, as silver has demonstrated resilience against selling pressure, evidenced by rebounds last Tuesday and Wednesday.
Goel characterized Friday's recovery as another potential dead-cat bounce, noting that during Tuesday's rebound, COMEX silver traded between $70 and $95 per ounce but failed to break above $95, subsequently slipping below the crucial $70 support level to establish a new recent low near $63 per ounce. Looking ahead, Goel anticipates silver prices settling between $25 and $30 per ounce within the next two years.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
