Silver prices on the Multi-Commodity Exchange (MCX) saw extreme volatility on Thursday, hitting a historic high before plunging sharply. At 9 a.m., the price of silver reached Rs 254,174 per kg, marking the first time it crossed the ₹2.50 lakh per kg mark. However, by the afternoon, prices tumbled to Rs 233,120 per kg, before recovering slightly and settling in the range of ₹237,000–₹243,000 per kg. This represents a drop of over 8% from the day’s peak.

Surge Driven by Supply Constraints and Industrial Demand

The initial surge in silver prices was attributed to new supply constraints from the industry combined with increased demand from sectors such as the photovoltaic industry, which relies heavily on silver. Experts noted that the limited availability and high industrial consumption contributed to the historic high price.

Factors Behind the Sharp Decline

Industry analysts cited multiple factors for the sudden price drop:

• Curb frenzy: Following the previous day’s surge, a market correction occurred as traders cashed in on profits.

• Geopolitical developments: Easing tensions in the Russia-Ukraine trade corridor reduced immediate demand for silver and other high-cost metals.

• Market recalibration: Increased trade opportunities in Russia and Ukraine created alternative options for industries, further reducing silver demand.

Silver Industry Revenue Growth

Despite the sharp decline, the silver industry has seen significant gains this year, with gross revenue up by 180%. The photovoltaic sector remains a major driver, as ongoing supply constraints have kept industrial demand strong.

Investor Outlook: Healthy Market Correction

While the rapid fall surprised many investors, experts view it as a healthy correction in an otherwise bullish trend. Traders are advised to monitor global economic and geopolitical indicators closely, as silver prices remain highly sensitive to external developments.

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