Silver Prices Experience Sharp Correction Amid Dollar Strength and Profit-Taking
Silver prices came under intense selling pressure during Friday's trading session on January 30, 2026, marking a significant reversal from their recent record-breaking rally. The precious metal, which had been the top-performing asset in early 2026, faced a substantial downturn influenced by a strengthening US dollar and widespread profit-taking by investors.
International and Domestic Market Performance
In international markets, spot silver prices witnessed a dramatic decline, plunging 7.4% to reach a daily low of $107 per ounce. This sharp drop reflected the broader sell-off in precious metals as market dynamics shifted.
Domestically, the March delivery contract on the Multi Commodity Exchange (MCX) mirrored this downward trend, experiencing a severe reversal. Prices fell by ₹34,192 per kilogram, representing an 8.55% decline, to settle at ₹3,65,701. If this selling pressure continues, it will effectively end the five-day rally that had characterized silver's performance on MCX.
It is important to note that silver prices had already shown signs of correction during the late trading hours of Thursday. During that session, prices dropped ₹20,155 from the intraday high to close at ₹399,893. Considering today's intraday low, silver has declined by ₹54,347, or approximately 15%, from its recent record high of ₹42,00,48. Gold prices also followed suit, dropping ₹21,529 per 10 grams from their record highs.
Key Factors Driving the Silver Sell-Off
US Dollar Strength: Despite ongoing geopolitical and trade concerns that typically support safe-haven assets like silver, the strength of the US dollar emerged as a primary trigger for the sell-off. The US dollar index, which measures the currency against six major peers, rose by 0.6% to 96.73 in today's trade. This appreciation makes dollar-priced commodities, including silver, more expensive for holders of other currencies, thereby reducing demand.
The greenback had already shown significant momentum earlier in the week, spiking 0.54% on Wednesday. This marked the biggest intraday surge in four months, following the US Federal Reserve's decision to leave interest rates unchanged. Despite its recent strength, the dollar is still on track to close the month down 1.8%, as shifting policies in Washington have weighed on investor confidence in the reserve currency.
Federal Reserve Leadership Speculation: Another critical factor contributing to the decline in silver prices was the speculation surrounding the next Federal Reserve chair. On Thursday, US President Donald Trump indicated his intention to announce his pick to replace Fed Chair Jerome Powell on Friday. Reuters reported that markets are intensifying speculation that the nod will go to former Fed Governor Kevin Warsh, who is one of four finalists on Trump's shortlist.
Markets are factoring in Warsh's historically hawkish stance, which has led to a dialling back of expectations for policy easing. Since gold and silver are non-yielding assets, they tend to lose their appeal in a rising interest rate environment, further pressuring prices.
Silver's Remarkable Rally and Current Standing
Despite the recent pullback, silver prices remain up by an impressive 58% for the month of January, provided today's sell-off does not deepen further. This performance highlights the metal's robust upward trajectory earlier in the month.
To provide context, silver crossed the ₹1 lakh mark on MCX in October 2024 and took 14 months to reach the next milestone of ₹2 lakh on December 12, 2025. The acceleration was remarkable thereafter, with silver hitting the ₹3 lakh mark in just 25 days on January 19, 2026. The subsequent ₹1 lakh jump occurred even faster, with silver reaching ₹4 lakh in merely nine trading sessions during the previous session.
Analysts believe that while short-term pullbacks are occurring due to overbought conditions, silver's broader uptrend remains strong and intact.
Expert Analysis and Market Outlook
Ponmudi R, CEO of Enrich Money, provided insights into the current market dynamics. He stated, "The sharp rally in silver has pushed momentum indicators into extreme overbought zones, which is leading to heat-led consolidation and rapid intraday pullbacks. However, the broader trend remains decisively bullish, with the steep rising channel intact and major EMAs providing strong dynamic support."
He further added, "The ₹3,55,000– ₹3,60,000 zone remains a critical base. Immediate resistance is seen near ₹4,15,000– ₹4,20,000, with potential extension toward ₹4,25,000 if momentum sustains. Dips continue to offer accumulation opportunities for positional participants."
Disclaimer: This story is for educational purposes only. 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.
