Silver shock: Prices crash by ₹21k in hours - 3 reasons behind the sudden drop

Mumbai (The Uttam Hindu): On Monday, the first trading day of the week, a historic fluctuation was seen in the silver prices in the country's futures market (MCX). Investors witnessed both sky-high rise and then a massive fall in silver in a single day. As soon as the market opened in the morning, silver created history and crossed the level of Rs 2.54 lakh for the first time, but this happiness could not last long. Within just a few hours, a huge fall of more than Rs 21,000 was recorded in the silver prices, which left the investors breathless.

Silver crashed 8% in just 3 hours

The data of Multi Commodity Exchange (MCX) surprised everyone today. As soon as the market opened at 9 am, there was a tremendous jump of more than Rs 14,000 in silver and the price reached its 'life time high' of Rs 2,54,174 per kg. However, after making the record high, such a phase of selling started in the market that by around 12:20 pm, silver fell by more than 8 percent from its upper level and reached Rs 2,33,120. That is, in just 3 hours the price fell by Rs 21,000. By afternoon, a slight recovery was seen in the market, but the pressure continued.

Russia-Ukraine peace talks and profit-making became the reason

Market experts believe that there are mainly three reasons behind the sudden fall of Rs 21,000 in silver from its record level. The biggest reason is massive profit booking. As soon as the prices reached record levels, investors started withdrawing their profits, which created heavy selling pressure in the market. The second and important reason is the Russia-Ukraine peace talks. There have been reports of meaningful talks between US President Donald Trump and Ukrainian President Zelensky to end the war. Trump said that they are very close to an agreement. With the expectation of reduction in war tensions, the demand for safe haven assets like gold and silver has decreased, which had a direct impact on the prices.

U-turn in the international market too

Silver prices in the international market followed suit, as did the Indian market. On Monday, silver prices surpassed $80 per ounce for the first time in the global market. However, profit-taking prevailed following news of peace talks, and prices fell below $75 per ounce. Signs of easing global geopolitical tensions have somewhat dimmed the bullion market.

Despite the decline, investors made bumper profits

Silver may have seen a significant decline today, but statistical data suggests it has proven to be a "golden egg" for investors this year. Despite the current decline, silver has delivered investors returns of over 180% this year. In just the current month, silver has generated a profit of nearly 40%. According to experts, silver's long-term outlook remains strong due to rising industrial demand and a decrease in supply.