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Silver crashed today i.e. Monday 29th December. They fell 8% or nearly ₹21,000 per kg on the Multi Commodity Exchange (MCX).
Silver opened at Rs 2.39 lakh in the morning and then reached an all-time high of Rs 2.54 lakh. Later it suddenly fell to Rs 2.33 lakh.
According to experts, the reasons for the sharp rise in prices range from signs of easing geopolitical tensions to technical factors. Margin increase is also a reason.
Silver had made an all-time high of Rs 2.54 lakh in the morning. Then within an hour it fell to around Rs 2.33 lakh.
1. Demand decreased: Selling on expectations of peace talks between Russia and Ukraine
The biggest and immediate reason for the fall in silver prices is being considered to be the news of peace talks regarding the Russia-Ukraine war. US President Donald Trump said on Sunday that he and Ukrainian President Zelensky are very close to a peace agreement.
With rumors of the war ending, investors started withdrawing their money from silver as a safe investment.
2. Technical signals: Price was 89% above 200 day average
According to market analysts, silver was trading 89% above its 200-day moving average (DMA). It has been seen earlier also that whenever prices reach this level, there is a big correction of 20-30%. Prices fell 70-90% after similar rallies in 1979-80 and 2011.
3. Margin increased: Traders had to sell their positions
Chicago Mercantile Exchange or CME has increased the initial margin on silver futures from around $20,000 to $25,000. This forced traders to deposit more cash and many were forced to cut their positions, leading to more intense selling.
What will happen next?
According to Reliance Securities analyst Jigar Trivedi, the long-term trend is still positive, but volatility will remain. At the same time, BTIG believes that if the prices go up to 50-DMA, then further correction of up to 25-30% is possible in the next 1-2 months.
MCX is India’s largest commodity derivatives exchange. Understand it in simple language like this:
- What happens: Just as shares of companies are bought and sold in the stock market (NSE/BSE), similarly commodities (like gold, silver, crude oil, copper and cotton) are traded on MCX.
- How it works: Here trading mainly takes place in futures and options. That is, you make a deal by fixing today’s price for some future date.
- Regulator: It operates under the regulations of the Securities and Exchange Board of India (SEBI).
- USP: MCX plays a big role in determining the prices of gold and silver in India. Apart from investments, it is also used by jewelers and industries to hedge price risks.
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Read this news also…
Can silver face a crash like 1980? Then the fall was caused by Hunt Brothers; Prices reduced by about ₹25 thousand in a week
It is the year 1980. The price of silver increased by $ 2 per ounce (28.35 grams) to $ 48. But how did this happen? America’s Hunt Brothers were behind this.
One-third of the world’s silver was in the pockets of these two brothers. Nelson Bunker Hunt and William Harber Hunt drove silver up by over 700%. This story from the Hunt Brothers involves greed, conspiracy, and a crash known as Silver Thursday.
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