Silver prices experienced a roller-coaster ride this week, swinging from a massive crash to a sharp recovery, leaving investors questioning the precious metal's near-term trajectory. After a strong rebound on Tuesday, the white metal came under intense selling pressure across major exchanges on Wednesday.
A Day of Sharp Declines
The sell-off was severe on the global stage. The COMEX silver price tanked over 9%, touching an intraday low of $70.315 per ounce. Mirroring this global trend, the domestic market witnessed a steep fall. The MCX silver rate today crashed over ₹19,000 per kg, reaching an intraday low of ₹2,32,228 per kg during the Opening Bell session.
Expert Outlook Amidst the Chaos
Despite the dramatic price drop, market experts maintain a strong outlook for silver. They argue that the rally in the white metal is structural and driven by fundamental factors, not merely speculative trading. However, they have been cautious about predicting when the metal might find a solid bottom.
Analysts believe silver prices will continue to trade with high volatility this week. A key reason cited is the closure of US and several other major global markets for the New Year holiday, leading to thinner liquidity and amplified price moves. A clearer picture for the market is expected to emerge only next Monday when full trading activity resumes globally.
Context of the Recent Swings
The recent volatility comes on the heels of a historic slump. According to a Reuters report, silver's Monday slump was its worst one-day fall in five years. This puts the Wednesday crash into perspective, highlighting the extreme turbulence. Despite these wild swings, it's crucial to note that silver remains 155% higher on a year-to-date basis, underscoring the strength of the longer-term uptrend.
The market demonstrated its resilience on Tuesday, just a day before the crash. MCX silver prices witnessed strong value buying and gained around ₹27,000, marking the largest intraday gain for the precious metal. This recovery helped the bullion pare most of its losses from the disastrous Monday session, finishing just around ₹3,000 away from its all-time high of ₹254,174 in the domestic futures market.
Has the Silver Rally Vanished?
Addressing the million-dollar question, experts clarify that the rally is far from over; it is merely evolving. Sugandha Sachdeva, Founder of SS WealthStreet, provided a nuanced view. She stated, "The white metal rally has not vanished; it has migrated from paper traders who rarely take delivery to industrial users who must secure supply to keep production lines running, to long-term investors and private vaults across Asia, London, and Singapore, away from exchange warehouses and outside the banking system."
This shift suggests a more robust and demand-driven foundation for silver prices, moving beyond exchange-traded speculation to actual physical consumption and strategic holding, which could support prices in the long run.
