Silver prices crash ₹21,000: Should you hold or book profits?

Silver prices crash ₹21,000: Should you hold or book profits?

Silver prices have witnessed a major crash, falling by ₹21,000 per kilogram on the Multi Commodity Exchange (MCX).

The sharp decline comes after an unprecedented rally that had taken the white metal to record highs.

The fall was triggered by easing geopolitical tensions, extreme deviation from key technical levels, heavy profit-booking, a margin hike, record weekly gains, and a stronger dollar.

MCX silver March futures plummets by 8%

In a major turn of events, MCX Silver March Futures crashed by 8% or ₹21,000 per kilogram on Monday.

The price fell from an all-time high of ₹2,54,174/kg to ₹2,33,120/kg.

This sharp decline was triggered by silver's historic breach of the $80-per-ounce mark in international markets and subsequent fall below $75 as profit-takers rushed for the exits amid easing geopolitical tensions.

Easing geopolitical tensions and technical indicators

The easing geopolitical tensions were sparked by US President Donald Trump's announcement of progress in peace talks with Ukrainian President Volodymyr Zelensky.

This development cut down safe-haven demand across the bullion complex, triggering aggressive profit-booking.

On the technical side, silver prices were trading 89% above their 200-day moving average (DMA), a level that has historically preceded major declines.

Historical patterns suggest sharp declines after momentum breaks

Manish Banthia, CIO Fixed Income at ICICI Prudential Mutual Fund, warned that such spectacular rises in silver rarely end gently.

He cited historical instances where silver prices had surged before collapsing sharply.

These past cycles indicate that once momentum breaks, silver can fall sharply—often by 50% or more.

Slight uptick US dollar and yields add to selling pressure

Last week's 18% gain was the largest weekly advance in over 45 years, with only three down weeks since mid-August.

Justin Khoo, Senior Market Analyst - APAC at VT Markets, said the selling pressure was compounded by a slight uptick in the US dollar and yields, reducing the appeal of non-yielding commodities.

Improved risk appetite in broader markets also led funds to rotate back into equities with traders squaring positions ahead of year-end.