Silver prices in India experienced a significant pullback on Thursday, retreating from the record highs witnessed in the previous session. The sharp correction was primarily driven by a combination of weak global trends and aggressive profit-taking by investors.
Market Plunge After Record Rally
On the Multi Commodity Exchange (MCX), silver futures for July delivery plunged by Rs 1,729 or 1.73% to settle at Rs 98,256 per kilogram. This decline came after the precious metal had skyrocketed to an all-time high of Rs 1,00,320 per kg on Wednesday. In the international markets, spot silver mirrored the trend, trading lower at $31.65 per ounce after touching a multi-year high above $32.
Key Factors Behind the Silver Price Correction
Analysts pointed to several immediate triggers for the sell-off. The primary reason was profit-booking by traders and investors following the meteoric rise. The rally had pushed silver into overbought territory, prompting a technical correction.
Furthermore, a strengthening US dollar index (DXY) exerted pressure on dollar-denominated commodities like silver. Market participants also adopted a cautious stance ahead of the release of key US economic data, including the core Personal Consumption Expenditures (PCE) price index, which is the Federal Reserve's preferred inflation gauge.
Analyst Views and Investment Advice
Market experts suggest that the long-term outlook for silver remains positive due to strong industrial demand, particularly from the solar panel and electronics sectors. However, the immediate sentiment has turned cautious.
"We might see some more correction in silver," stated one analyst, advising traders to wait for a dip towards support levels around Rs 96,500-95,000 per kg before considering fresh long positions. The advice for investors is to avoid buying at current elevated levels and look for better entry points during corrections.
Broader Precious Metals Market Trend
The correction was not limited to silver. Gold prices also traded lower, with MCX August gold futures falling by Rs 34 or 0.05% to Rs 72,460 per 10 grams. The broader complex of precious metals took a breather as the market reassessed the pace of expected US interest rate cuts and their impact on non-yielding assets.
This price action highlights the volatile nature of commodity markets, where sharp rallies are often followed by swift corrections as traders lock in gains. Investors are now closely watching global macroeconomic indicators for the next directional cue.
