Silver Market in Freefall: Prices Erase All 2026 Gains Amid Intense Selling Pressure
The relentless sell-off in silver prices intensified during Friday's trading session, as investors continued to aggressively offload the white metal, completely wiping out all gains accumulated since the beginning of 2026. Silver prices have now firmly entered negative territory for the calendar year, marking a dramatic reversal from its previous record-breaking rally.
Precipitous Decline on MCX Futures Contracts
The March delivery futures contract on the Multi Commodity Exchange (MCX) experienced another significant drop, falling by ₹14,628 per kilogram to reach an intraday low of ₹2,29,187. This price level is now testing this week's previous low of ₹2,25,805. Cumulatively, the week-to-date decline has reached a staggering ₹27,852 per kilogram, representing a substantial 10.52% decrease. This sharp downturn follows last week's fall of ₹28,453 per kilogram, compounding the metal's recent woes.
This represents a remarkable correction of 45.6% from the peak price in just seven trading sessions, when considering today's low. Notably, this decline is more than twice as severe as gold's 17.35% fall from its peak during the same period, highlighting silver's exceptional volatility.
From Record Highs to Searching for a Floor
Silver, which had been enjoying an unprecedented rally until January 2026, with prices soaring past ₹4.20 lakh per kilogram on optimism surrounding its dual appeal as both a safe-haven asset and an industrial metal, is now struggling to find a stable floor. The recent crash has prompted market observers to question whether silver is now paying the price for an overheated, rapid run-up.
Expert Analysis: Understanding the Extreme Correction
Akshat Garg, Head of Research & Product at Choice Wealth, explained the primary reasons behind this extreme correction. "Silver, by its very nature, reacts more sharply than gold. It is a smaller and thinner market, so when sustained selling begins, the decline appears steeper and more pronounced," Garg stated.
He elaborated further, "Silver has retreated mainly because it had ascended too rapidly within a short timeframe. Over the past year, prices had moved sharply higher, and a significant amount of optimistic positioning had already been established. When markets become stretched to such extremes, even minor changes in global cues can trigger a substantial correction. Currently, a slightly stronger US dollar and some cooling in global risk appetite are prompting investors to reduce their exposure to volatile assets like silver."
Garg also highlighted the sharp correction in silver Exchange-Traded Funds (ETFs), which closely track spot prices. During such volatile phases, short-term selling pressure combined with lower liquidity can make ETF prices appear even weaker. According to the expert, this phenomenon is more about price adjustment and profit-booking rather than any sudden deterioration in silver's fundamental strengths.
Nirpendra Yadav, Senior Commodity Research Analyst at Bonanza, noted that such corrections following extended rallies are common in commodity markets. "Broader risk sentiment and evolving geopolitical cues can prompt profit booking in commodities, especially in segments where investor positioning has become excessively crowded," Yadav commented.
Investment Strategy Amid Heightened Volatility
While silver prices have corrected sharply, analysts emphasize there is no immediate cause for panic, though they underscore the inherently volatile nature of the metal. Yadav pointed out that industrial demand for silver remains robust, and a tight supply environment coupled with persistent global deficits continues to support price stability over the medium-to-long term, despite current volatility. He advised that investors should not allow sharp intraday declines to shape their long-term perspective on silver.
According to Garg, a single correction does not diminish silver's long-term relevance, but it does highlight why appropriate position sizing is absolutely critical for investors. He recommended that investors avoid chasing prices or reacting impulsively to day-to-day market movements, noting that silver functions most effectively as a small, supporting allocation within a diversified portfolio rather than as a core holding.
Garg added that for investors seeking exposure to silver, staggered buying through systematic investment represents a far more sensible approach than lump-sum investing, particularly during highly volatile market phases. For short-term traders, he emphasized that rigorous risk management is essential. For long-term investors, the current phase calls for patience and discipline rather than immediate, reactionary action.
He concluded by pointing out that the ongoing decline is being driven more by market positioning adjustments and global macroeconomic recalibrations than by any fundamental breakdown in silver's long-term investment thesis.
Disclaimer: This analysis is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking companies. Investors are strongly advised to consult with certified financial experts before making any investment decisions.
