Silver rate today on MCX extended losses on Monday, February 2, following a steep correction over the previous two sessions. The white metal has now fallen more than 39% from its record high of ₹4,20,000, hit on Thursday (January 30) on firm dollar and as higher CME margins take effect from today.
MCX silver price fell 4% to day’s low of ₹255652.00
However, a recovery was visible in global markets, where spot silver jumped over 8% to $84.140 after briefly tumbling nearly 12% in early trade.
Gold prices also declined on MCX in Monday’s session, furthering losses after witnessing their sharpest single-day fall in more than a decade.
MCX gold price lost 1.5% to day’s low ₹1,40,000. However, In international markets, spot gold recovered as much as 1% after dropping 4% during early Asian trading hours.
The Rise and Fall of Precious Metals
Over the past year, precious metals have surged to unprecedented highs, surprising even experienced traders. The rally intensified sharply in January as investors flocked to gold and silver amid concerns over geopolitical instability, weakening currencies and questions around the Federal Reserve’s independence. Additional speculative buying from China further fueled the surge.
The immediate trigger for Friday’s steep selloff was the announcement that US President Donald Trump intended to nominate Kevin Warsh as the next Federal Reserve Chair. This development strengthened the US dollar and dampened sentiment among traders who had been positioning for a weaker currency under Trump’s leadership. Warsh is widely perceived as a firm inflation hawk, which raised expectations of tighter monetary policy supportive of the dollar and negative for dollar-priced bullion.
Further pressure came from reports that CME Group decided to increase margin requirements on Comex gold and silver futures following the largest price swings seen in decades. This comes into effect from today, February 2.
According to the exchange, margin requirements for gold futures will be raised to 8% of the contract value from the existing 6% for non-heightened risk accounts. For heightened risk profiles, margins will increase to 8.8% from 6.6%. For silver futures, margins will be increased to 15% from 11% for non-heightened risk profiles, while for heightened risk accounts, the requirement will rise to 16.5% from 12.1%. Margin requirements for platinum and palladium futures are also set to be increased.
Time to accumulate or exit positions?
Silver’s recent crash has prompted market experts to urge investors to temper expectations and avoid reactive decisions. While the metal continues to decline amid firm dollar, profit booking and CME margins coming into effect today, analysts believe the current phase is marked more by heightened volatility than by a stable directional trend.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, observed that silver is likely to remain far more volatile than gold in the near term, with the potential for sharp and exaggerated price movements. He advised that investors adopt a cautious approach and closely observe price behavior rather than rushing into fresh positions until signs of stability become clearer.
Echoing a similar sentiment, Akshat Garg, Head Research & Product at Choice Wealth, said, “For investors, this isn’t a moment for panic. Gold and silver are portfolio hedges, not trading bets. If your allocation is sensible, staying put makes sense. If anything, staggered buying during corrections works better than chasing rallies. Volatility hurts emotions, not long-term plans.”
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.
