Silver prices in India have come under intense selling pressure this week, mirroring a sharp decline in international markets. Domestic silver prices have fallen below Rs 2 lakh per kg on the Multi Commodity Exchange (MCX), extending their losing streak to third consecutive sessions.
MCX silver prices declined as much as Rs 6,799, or 3.40%, to Rs 1,92,800 per kg on Friday. Over the past ten sessions, prices have plunged Rs 32,955, or more than 14%.
At 11:50 AM, silver prices were trading lower by Rs 2,761, or 1.38%, at Rs 1,96,838 per kg.
In the international market, spot silver fell 1.2% to $53.90 per ounce, weighed down by concerns over global economic growth and the interest rate outlook.
Why Are Silver Prices Falling?
The decline in domestic silver prices has tracked the weakness in international futures, with the recent appreciation in the rupee providing only a partial cushion against the fall.
According to Jigar Trivedi, Senior Research Analyst at IndusInd Securities, silver has underperformed gold during the recent sell-off, as renewed attacks on Saudi infrastructure have kept Brent crude prices near $113 per barrel, reigniting concerns about inflation and the possibility of tighter monetary policy by the US Federal Reserve.
Trivedi noted that positioning data from the Commodity Futures Trading Commission (CFTC) showed that speculative net-long positions in silver futures had already been declining ahead of the latest sell-off. Managed-money net-long positions fell from 13,100 contracts in mid-September to 7,500 and subsequently to 5,600 contracts as of October 13. This reduction in bullish positioning could limit the extent of further long liquidation, he said.
The gold-silver ratio has also climbed to 75. According to Trivedi, a sustained break above 74.1 signals the possibility of further underperformance by silver relative to gold.
He also highlighted concerns over the sustainability of artificial intelligence-related investments, noting that a potential slowdown in fresh AI investments could weigh on silver demand in the near term.
Silver Price Outlook: How Low Can Prices Fall?
Analysts believe the near-term outlook for silver remains weak, with the possibility of further declines despite the metal entering oversold territory.
Trivedi identified $54 per ounce as a key technical level for international silver prices. A decisive break below this level could expose the $52-$53 support zone. He added that a deeper daily break below $54.77 has opened the possibility of a decline towards the psychologically important $50 mark.
On the domestic front, Trivedi expects MCX Silver December futures to decline towards Rs 1,85,000-Rs 1,75,000 per kg over the next couple of months.
He cautioned investors against rushing to buy the metal amid the sharp correction, advising them to exercise caution before attempting to catch a falling knife.
MCX Silver Support And Resistance Levels
Ponmudi R, CEO of Enrich Money, said the immediate support zone for MCX silver lies between Rs 1,92,000 and Rs 1,94,000 per kg. A break below this range could expose the next support zone at Rs 1,83,000-Rs 1,85,000 per kg.
Technical indicators also suggest that selling pressure remains elevated. The Relative Strength Index (RSI) is hovering around 24, indicating deeply oversold conditions, while the Moving Average Convergence Divergence (MACD) remains below its signal line, suggesting that bearish momentum has yet to ease.
On the upside, the Rs 2,00,000-Rs 2,02,000 range has emerged as immediate resistance, followed by the Rs 2,06,000-Rs 2,08,000 zone, Ponmudi said.
He cautioned that oversold technical indicators alone are insufficient to confirm a reversal in prices.
The near-term outlook for silver remains bearish, with a sustained move above Rs 2,00,000-Rs 2,02,000 needed to stabilise prices. Conversely, a decisive break below the Rs 1,92,000-Rs 1,94,000 support zone could accelerate the decline towards Rs 1,83,000-Rs 1,85,000 per kg.
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