In a dramatic reversal of fortunes, the white metal silver experienced a brutal sell-off on Monday, December 29, erasing a significant portion of its recent record-breaking gains. After a parabolic rally, silver prices took a sharp U-turn, plummeting over 8% or ₹21,000 per kilogram, from a peak of ₹254,174 per kg.
What Triggered the Silver Bloodbath?
The precipitous fall was primarily driven by investors rushing to book profits following a non-stop, steep surge. On the Multi Commodity Exchange (MCX), Silver March futures settled at ₹2,25,954 per kg, marking a 5.7% decline from its record levels. This mirrored a global correction, where prices had briefly crossed the $80 per ounce mark for the first time before easing.
Analysts pointed to a combination of factors for the sudden crash. Tony Sycamore, an analyst at IG, described the rally as a "generational bubble" and noted the sell-off as a much-needed cooling-off period. He attributed the gap higher at Monday's open to stop losses, panic buying, and the Chicago Mercantile Exchange raising margin requirements.
Furthermore, easing geopolitical tensions contributed to the downturn. Discussions between US President Donald Trump and Ukrainian President Volodymyr Zelensky regarding a potential peace deal reduced the safe-haven demand that had been supporting bullion markets, triggering significant profit-taking.
Why Did Silver Rally So Sharply in the First Place?
The record rally preceding the crash was not seen as merely speculative by experts. Sugandha Sachdeva, Founder of SS WealthStreet, called it a structural inflection point. She highlighted a growing disconnect between paper trading and physical market realities. During the Christmas holidays when Western markets were closed, trading in Asia revealed a stark picture: physical silver in Shanghai surged near $82, while COMEX prices lagged, indicating acute physical scarcity and depleted inventories.
Anuj Gupta, Director of Ya Wealth, emphasized structural shifts elevating silver's status as a safe-haven asset rivaling gold. He pointed to groundbreaking technological demand, specifically from the impending mass production of solid-state batteries by companies like Samsung. Silver is a core raw material for these batteries, which promise faster charging and longer lifespans. Coupled with existing demand from electric vehicles (EVs), solar industries, and others, this is expected to create a massive demand-supply gap.
Where Are Silver Prices Headed Now?
Despite the sharp correction, the fundamental outlook for silver remains robust among many analysts. Ponmudi R, CEO of Enrich Money, noted that silver continues to outperform in the precious metals space. He stated that silver has given a clean breakout above the ₹2,32,000 to ₹2,35,000 range, which could trigger the next leg of the rally with upside targets towards ₹2,40,000 to ₹2,50,000 per kg.
The consensus suggests that while the recent plunge has tempered short-term enthusiasm, the long-term drivers—physical scarcity, massive industrial demand, and its monetary role—remain firmly in place. The market is now watching for stability after this volatile correction.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
