Silver Prices See Biggest Correction Since Inception
Silver prices on the Multi Commodity Exchange saw the biggest correction since the metal’s inception, falling by 16,715 points from the day’s high to the day’s low on Oct. 17. This historic volatility saw silver futures plunge nearly 10% from their peak before managing to settle with modest gains.
The white metal had surged to a record Rs 1,70,415 per kg earlier in the session on the MCX. However, as global safe-haven demand eased, it slipped sharply to hit an intraday low of Rs 1,53,700, as per data shared by Anuj Gupta, Director of YA Wealth Global. Despite the massive intra-day swing, it pulled a partial recovery in the final hour of trade to close at Rs 1,57,300, up 0.44% from the previous day’s close.
Global Factors Contributing to the Correction
The dramatic drop in Indian futures followed a severe slump in global prices, where US spot silver fell as much as 6% on Friday, marking its largest single-day decline in six months.
Globally, silver recovered slightly to close down 4.75%, after peaking at $54.63 and settling at $51.86 an ounce. According to Anuj Gupta, the magnitude of the correction, a drop of 16,715 points, is unprecedented. “The biggest correction in silver by 16,715 points from day’s high to day’s low in silver since inception,” stated Gupta.
Understanding the Pullback in Precious Metals
The pullback in precious metals was attributed to several factors that calmed market anxieties, which in turn reduced the appeal of safe-haven assets.
Gupta cites concerns over US credit quality and China-US trade tensions easing following the comments from President Donald Trump, as a factor that helped stabilise global trade worries.
“Positive results from regional banks helped stabilise the stock market and pushed bond yields higher. The resulting rise in interest rates typically pressures gold and silver prices, as these metals are non-yielding assets,” he said. Further, the signs of easing in the historic silver squeeze in the London market led to widespread profit-taking among investors, he added.
Impact on Gold Prices
Zooming out, the decline was not limited to silver, as gold also pulled back from its recent rally. US spot gold was down 3% at $4,186.4 an ounce. On the MCX, the yellow metal’s futures dropped nearly 5% from its day’s high of Rs 1,32,294 per 10 grams to an intraday low of Rs 1,25,957, though it ended the session with minor 0.25% gains.
What This Means for Indian Investors
For Indian investors, this significant correction in silver prices presents both opportunities and challenges. On one hand, the drop in prices could be seen as a buying opportunity, especially for those who believe in the long-term potential of silver. On the other hand, the volatility and uncertainty in the market could deter some investors, especially those with a short-term perspective.
It’s essential for investors to stay informed and adapt to the changing market conditions. They should consider their investment goals, risk tolerance, and time horizon before making any decisions. Additionally, diversifying their portfolio and keeping a close eye on market trends can help them navigate the complexities of the Indian stock market.
Conclusion
In conclusion, the biggest correction in silver prices since inception is a significant event that warrants the attention of Indian investors. By understanding the factors that led to this correction and staying informed about market trends, investors can make more informed decisions and navigate the challenges and opportunities presented by the Multi Commodity Exchange.
