Silver prices continued their downward trend on Monday, October 27, as increasing optimism regarding a possible US-China trade agreement and a robust dollar put pressure on the safe-haven commodity. Silver futures experienced significant losses on the MCX, dropping over 16% from its all-time high of ₹170,415. MCX Silver December contracts were down 0.83% at ₹146,241 per kg as of 13:57 IST.
Analysts suggest that the possible trade agreement between the US and China was unexpected and has positively impacted the markets as a whole. However, the downside to this is that these developments have adversely affected precious metals.
Experts anticipate that silver prices may experience a short-term correction because of elevated valuations and a steep rally in the recent times. However, they remain optimistic in the long term, citing factors such as industrial demand, favourable trade deal sentiments, increasing global growth, and a low interest rate climate.
Further, Rahul Kalantri, VP Commodities, Mehta Equities Ltd, said that after an exceptional two-month bull run, silver faced heavy profit-booking last week, with prices slipping below $48 per ounce on Monday, extending the recent downward trend. The correction was largely influenced by a stronger US dollar and optimism surrounding trade talks between the US, China, and India.
This week, precious metals are likely to remain volatile ahead of key central bank meetings. The Federal Reserve is widely expected to announce a 25-basis-point rate cut following soft inflation data, while the ECB and BOJ are expected to maintain their current policy stance.
Opportunity to buy or more downside left?
Jigar Trivedi, Senior Research Analyst at Reliance Securities said that in the short-term spanning 3 to 6 months, more caution is warranted. Because valuations are elevated and the rally has already advanced, the chance of a meaningful correction is higher.
“If one is holding now, you might consider locking in profits (in part) or at least tightening stop-losses / reducing exposure. We may see a further deep to ₹135,000/kg on MCX, if the prices fall in the international markets. The outlook is positive but a sharp correction is not ruled out hence buy on dips should be followed,” added Trivedi.
From a medium to long-term viewpoint (12–24 months), Trivedi is confident that the outlook for silver is promising (though it does come with some risks).
“If one believes in the industrial, investment demand story, and comfortable with volatility, this could be a buy zone on dips — not necessarily chasing the top,” said Jigar.
Further, Rahul Kalantri, VP Commodities, Mehta Equities Ltd, added that Silver may trade within the $47.00–$50.50 per ounce range, with $47 acting as a crucial support level — a breach could trigger fresh selling pressure of 4–7%. In the domestic market, ₹1,42,400 remains a major support zone.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.