Silver Price decrease to 20,000
While gold prices have fallen over the past week, silver prices have also fallen sharply. Silver prices had been steadily rising, but that seemed to be halted last week. In just seven days, silver prices fell by more than ₹20,000 per kilogram. Silver prices have fallen sharply not only on MCX but also in the domestic market. Recently, silver crossed the ₹1.70 lakh mark, but now it has fallen significantly from its highs. Let’s explore the major reasons behind this decline .
Silver has become so cheap on MCX.
While gold is continuously getting cheaper, the price of another precious metal, silver, is also falling. On October 16, the price of silver was running at Rs 1,67,663 per kg on the Multi Commodity Exchange (MCX). However, on Friday, the futures price of 1 kg of silver on MCX fell to Rs 1,47,150. Accordingly, silver has become cheaper by Rs 20,513 per kg in just seven trading days.
Now the price in the domestic market has come down to this much
Not only on the Multi Commodity Exchange, but the price of silver has seen a sharp fall in the domestic market as well. If we look at the updated rates on the website of Indian Bullion Jewellers Association IBJA.Com, the price of silver was Rs 1,68,083 per kg on 16th October, which fell continuously on the last trading day of the week, Friday, and reached Rs 1,47,033 per kg. In this way, its price has fallen by Rs 21,050 per kg.
Why is silver slipping?
There are not just one but several reasons for the decline in silver prices. The first reason is attributed to a decrease in demand after the Diwali and Dhanteras festivals, which has put pressure on prices. Another reason is that silver has fallen after reaching lifetime highs due to investors booking profits.
The third reason is believed to be the strength of the US dollar. Indeed, both gold and silver are traded in dollars. Therefore, when the US dollar strengthens, silver becomes more expensive for investors in other countries, and its demand decreases. The dollar index has seen a 0.8% increase since 2019. Although minor, this is still impacting investor sentiment. The strengthening of the dollar has led investors to withdraw money from precious metals like gold and silver and invest in dollars, leading to a decline in silver prices.
Speaking of other reasons, the fourth major reason is geopolitical stability. If the global situation remains stable or economic tensions decrease, the demand for precious metals considered safe havens decreases. The ongoing trade tensions between the US and China had led to a surge in these metals for a long time, but now signs of easing tensions between the two countries have put pressure on its prices, and silver prices have fallen. The fifth reason can be considered to be fluctuations in ETF and commodity markets. In fact, when large ETF funds reduce their holdings in silver, the supply in the market increases and the price starts falling.
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